WASHINGTON—Sales of previously owned homes rose to their strongest pace in nearly a decade in June, buoyed by low mortgage rates and an improving economy.
The pace of existing home sales increased 1.1% last month from May to a seasonally adjusted rate of 5.57 million, the National Association of Realtors said Thursday. That puts them at their highest level since February 2007.
Sales for May were revised to 5.51 million from an initially reported 5.53 million. Economists surveyed by The Wall Street Journal had expected June sales would decrease 0.7% to a pace of 5.49 million.
The housing market has been boosted in recent months by strong job growth, improving wages and mortgage rates that have dipped near historic lows following Britain’s decision to leave the European Union.
Economists had predicted that the pace of home sales would moderate in 2016 due to a lack of homes for sale and lackluster economic growth. Thus far, the market has largely outperformed those expectations.
Still, Realtors economist Lawrence Yun cautioned that the market is likely to slow throughout the rest of the year. Pending contracts for home sales and foot traffic at open houses have both fallen recently. Ongoing inventory shortages are likely to depress purchases, even if demand remains strong.
“There are some cautionary notes,” he said. “We may just have hit peak levels.”
Sales of existing homes account for roughly 90% of all purchases in the U.S. At the current pace of sales, it would take 4.6 months to exhaust the supply of homes on the market—down from 5 months this time last year, the NAR said on Thursday. Total housing inventory at the end of June decreased 5.8% from a year ago to 2.12 million existing homes available for sale.
The share of first-time buyers hit 33% in June, its highest level since July 2012. Although rising home prices have helped keep new buyers out of the market, near record-low mortgage rates may be helping to draw more in. The rate for a 30-year, fixed-rate mortgage averaged 3.45% in the last week, according to a report by Freddie Mac on Thursday, down from 4.04% a year ago.
June was the most competitive housing market since 2009, according to Redfin, a real-estate brokerage. In June, the typical home went under contract in 41 days, the shortest time seen since Redfin began tracking the market in 2009, and four fewer days than last June.
“Buyers have held up their end of the market, spurred by very low mortgage rates. But the lack of new listings continues to crimp overall activity, meaning that there’d be more sales if there were more people selling,” said Nela Richardson, Redfin’s chief economist.
An uptick in new-home construction is helping to address supply shortages—although the inventory of homes for sale remains far below normal levels. Housing starts rose 4.8% in June, the Commerce Department said Tuesday.
A lack of new supply is continuing to drive up home prices, even as a flood of new apartment has finally started to moderate rent increases. The median sale price for a previously owned home was up 4.8% to $ 247,700 from a year earlier in June, according to NAR.