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Home Buyers Race to Get Low Interest Rates Before They’re Gone

It’s not just the temperatures that are rising this summer. The number of homes sold, as well as the prices they’re fetching, seemed to be shooting up higher than the mercury in June, according to a new report.

With mortgage interest rates hitting bargain-basement lows, buyers raced to the market undeterred by the record-breaking prices (or maybe in fear that they’d rise even further). Existing home sales shot up 11%, to 583,000, from May to June, according to a recent report from the National Association of Realtors®. Sales were also up 1.9% from the same time a year earlier.

The report only included existing homes, which are residences that aren’t newly constructed. And realtor.com just looked at the numbers that were not seasonally adjusted, meaning they weren’t smoothed out over a 12-month period to account for fluctuations.

June’s median existing home price also rose 4.8% year-over-year, to $247,700—breaking May’s all-time high, according to the report. It was the 52nd straight month of year-over-year price increases.

“We expected the [season] to be the best in a decade and we’ve seen sales come in just as we expected,” says realtor.com’s chief economist, Jonathan Smoke. “More people signed contracts and will be closing [this summer] because of the lower mortgage rates.”

But sales—and the rise of those pesky prices—are expected to slow, he says. That’s because many buyers will have already become homeowners—or they’re simply priced out of the market.

“The number of sales has to eventually hit a ceiling because there aren’t enough homes for sale,” Smoke says. “The following months, particularly September and October, could have sales declines.”

On a welcome note, about a third of June buyers, 33%, were first-time homeowners, according to the report. That’s the highest percentage since July 2012.

“The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply—particularly areas in the Midwest and parts of the South,” NAR’s chief economist, Lawrence Yun, said in a statement.

That may help to explain why the most homes continued to sell in the South, with new owners picking up the keys to 230,000 abodes in June, according to the report. Sales were up 9.5% from May and 1.8% from the same time a year ago.

Median prices climbed 3.9% to $258,500 in June compared with a year earlier.

Sales also remained strong in the Midwest and the Northeast.

In the Midwest, 149,000 residences went under contract. That was up 12.9% from May and 2.8% compared with a year earlier. Prices in the region rose by the highest annual percentage, 6%, hitting $235,900.

Only 77,000 homes sold in the Northeast, far fewer than the rest of the country. But the number of sales represented a 11.6% jump from May and a 6.9% bump from a year ago. Median prices were also up 1.5% year-over-year to $320,500.

The only region to see an annual decline was the West, which includes super-duper expensive cities like San Francisco. New owners signed on the dotted line for 127,000 residences—representing a 1.6% drop from June 2015. However, monthly sales were up 11.4% over May.

Median prices were—unsurprisingly—also the highest in the West, hitting a heart-attack inducing $379,900. That was up 5.7% from the same time a year ago.

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Source: Real Estate News and Advice – realtor.com » Real Estate News