Existing home sales rose 2.4% in May — the second consecutive monthly increase, the National Association of Realtors said today. But the May level — adjusted for seasonal variations — was lower than some economists had predicted.
The important thing here is that home sales aren’t falling, indicating that a bottom might be near. Michelle Meyer, economist with Barlays Capital in New York, told me that she thinks the increase is good news. But she also pointed out that the sales that closed in May went into contract a month or two earlier. So the rising interest rates have yet to be factored into the sales data.
Interest rates for a 30-year fixed mortgage have increased from 5.13% on April 1 to 5.76% on June 17, according to Bankrate.com.
“It reflects housing conditions in April, prior to the runup in mortgage rates,” Meyer said. “I don’t know how it will respond to the jump in mortgage rates in the last month.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.