Sales of existing U.S. homes broke yet another record in June, rising 2.7 percent from May and 4.4 percent from a year ago, as buyers continued to grab at low-interest mortgages, the National Association of Realtors said yesterday.
The flurry of selling sent the median price of a home nationally to an all-time high of $219,000, up 6.3 percent from $206,000 in May and up 14.7 percent from $191,000 a year ago. The year-over-year increase was the biggest since November 1980, when annual appreciation was 15.6 percent, the Realtors group said.
Many analysts were surprised by the report, which showed sales rising to a seasonally adjusted annual rate of 7.33 million from 7.14 million in May and from 7.02 million a year ago. Many had predicted -- again -- that the frenetic housing market would begin to slip because prices have jumped so much and because affordability is increasingly a problem. The previous record of 7.18 million in sales came in April.
Some economists said the numbers were further evidence of the "froth" in some regions that Federal Reserve Board Chairman Alan Greenspan has warned about.
"The market is just increasingly out of control," said Mark M. Zandi, chief economist at Economy.com. "These . . . are just numbers that I couldn't even have imagined a couple of years ago. To me, it indicates increasing investor demand and froth. Just raw speculation."
The number of homes for sale in the Washington area has climbed by 50 percent in recent months, according to the Metropolitan Regional Information Systems Inc., which runs the local multiple-listing service.
David A. Lereah, chief economist of the Realtors group, was upbeat rather than alarmed. "Home sales are red hot, and price appreciation is the highest since November 1980, that's 25 years," marveled Lereah. "And the reason is: low mortgages combined with a growing economy."
He said, "We are going to see some slowing soon, but I've been saying that for some time and it has never happened. We should see some [slowing] in the second half of this year, but we'll be going into that half with a lot of momentum."
The Realtors and other housing groups are predicting that home sales will hit a fifth-straight annual record in 2005 because of low mortgage rates.
Zandi said the sales and price gains are "not sustainable." Investors, he said, are forcing "the basic buyer out of the market. . . . Affordability is being completely undermined."
He added that "anecdotal evidence of softening" and increasing inventory in some of the most active markets, including Las Vegas and the Washington area, "should be watched very, very carefully."
Local real estate industry officials said yesterday the increased inventory may indicate only that a very tight market is loosening.
"I can attribute this to summer. I need to see longer trends" to say the market is weakening, said Susann H. Haskins, president of the Greater Capital Area Association of Realtors.
Brenda B. Shipplett, president and chief operating officer of Long & Foster Real Estate Inc., said the company expects to set another record this year and welcomes a slightly slower pace. "We like the fact that it's taking a little longer to sell because it makes it a little saner for all involved," Shipplett said.