By Margaret Chadbourn
WASHINGTON, Sept 19 (Reuters) - U.S. home resales hit a6-1/2 year high in August as buyers flocked back to the marketto lock in cheap borrowing costs amid rising mortgage rates, asignal of continued strength in the housing market recovery.
The National Association of Realtors said on Thursdayexisting home sales increased 1.7 percent to an annual rate of5.48 million units last month, the highest level since February2007 when property values began to decline after the sector'sboom and bust.
Economists polled by Reuters had expected home resales torise to a 5.25 million-unit rate. The housing recovery hashelped shore up the economy by bolstering household finances andsupporting consumer spending.
Lawrence Yun, NAR chief economist, said the housing marketmay be experiencing a temporary peak as would-be buyers sittingon the fence are pushed to close deals ahead of likely price andborrowing cost increases.
"Rising mortgage interest rates pushed more buyers to closedeals, but monthly sales are likely to be uneven in the monthsahead from several market frictions," he said, pointing to tightinventory limiting choices in many real estate pockets.
Mortgage rates have risen in recent months after hitting alow of 3.35 percent in May, according to data from Freddie Mac.The rate for a 30-year fixed rate loan was at 4.5 percent as ofSept. 19, hovering near a two-year high.
The Federal Reserve cited tighter financial conditions asone reason for its decision this week not to taper its stimulusprogram aimed at supporting growth, a surprise to investors andeconomists who had expected it to scale back bond-buying. Slowerasset purchases would have pushed mortgage rates even higher.
Last month, the inventory of unsold homes on the marketincreased slightly and represented 4.9 months' supply atAugust's sales pace, the NAR said.
"There's an ongoing housing shortage," Yun said, adding: "Idon't anticipate this housing shortage to go away."
The months' supply remained below the 6.0 months that isnormally considered as a healthy balance between supply anddemand. The U.S. housing market had been impacted by tightsupplies in some parts of the country.
The median home sales price in August rose 14.7 percent froma year ago to $212,100.
Distressed properties, foreclosures and short sales, whichtypically occur at deep discounts, accounted for about 12percent of overall sales last month, the lowest since NAR begantracking the data in 2008.
Investors bought 17 percent of homes in August, withfirst-time buyers accounting for 28 percent of the transactions.
Rising home values and mortgage interest rates have startedto price some first-time buyers out of the housing market andaffect affordability.
- Real Estate
- housing market