Wednesday, August 21, 2013

"Panicked" homebuyers rushed to close in July

We now have a confirmation that US housing demand in July was boosted by fear of higher rates (discussed here). July existing home sales spiked to a new post-recession high.

Source: NAR

NAR: - Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines... The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers.
The less "official" statement from NAR's Chief Economist Lawrence Yun was: "So the increase in rates I think panicked some buyers into wanting to close the deal before the rates perhaps would rise further. The initial phase of an interest rate increase generally provides a sense of urgency to close."

Clearly this demand can not be sustained going forward and we should see a decline in sales in the next few months.
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