Many economists had expected home sales to slacken significantly because of rising mortgage interest rates in April and May and because of concern that prices are outpacing inflation.
For example, Merrill Lynch & Co. and Lehman Brothers Inc. economists had predicted this week that June new-home sales would dip about 7 percent.
There's no consensus among economists on what could happen later this year and beyond.
Some say the nation is in a housing bubble and prices are too high by as much as 20 percent. "The fact that there has been an unprecedented run-up in home prices over the past eight years creates the possibility for an unprecedented decline in the years ahead," Dean Baker of the Center for Economic and Policy Research wrote in a recent report.
Others say talk of a bubble is rash. Robert P. Curran, senior director of Fitch Ratings Ltd. and its primary analyst of the housing industry, said concerns about bubbles and rapidly rising mortgage rates appear to be overstated.
"People have been calling the peak for five or six years, and it just hasn't happened," Curran said.
David F. Seiders, chief economist for the National Association of Home Builders, said: "I firmly believe that current price levels are sustainable, i.e., supported by fundamentals rather than by raw speculation virtually everywhere.
"Economic [and] job market conditions are improving in most places, and history shows that house prices don't fall in the absence of severe economic dislocations."
May was particularly hot, analysts say, because buyers grabbed low mortgage rates before they increased.
By June 20, rates on 30-year loans were up to an average 6.32 percent in anticipation of the Federal Reserve's expected vote to raise overnight interest rates on June 30. Since the vote, though, rates have unexpectedly fallen, to below 6 percent as of last week, the lowest in three months. Some economists say the drop probably is prompting more potential buyers to take the plunge, but they suspect that most people have jumped by now.
