Sales of previously occupied homes rose 1.7 per cent to a seasonally adjusted annual rate of 5.48 million in August, the National Association of Realtors said Thursday. That level is consistent with a healthy market.
August sales reflect contracts signed in June and July, when mortgage rates were rising steadily. The Realtors' group cautioned that buyer traffic dropped off significantly in August. That means sales could slow in the months ahead.
Higher rates will also likely depress sales next year, the Realtors' said. The group forecasts that sales will average 5.2 million in 2014.
Home prices rose as the supply of available homes remained tight. There were 2.25 million homes for sale last month, down 6 per cent from a year earlier.
Steady job gains and low mortgage rates have fueled a recovery in housing since early last year. But rates have risen since May and have begun to restrain housing's rebound.
The average rate on a 30-year fixed mortgage was 4.57 per cent last week, more than a full percentage point higher than in May. That's when Federal Reserve Chairman Ben Bernanke suggested that the Fed could soon scale back its $85-billion-a-month bond purchase program, which is intended to keep interest rates low.
On Wednesday, the Fed decided against reducing its purchases. It said one key reason for its decision was the sharp increase in mortgage and other interest rates. Pulling back on its bond purchases could have sent such rates even higher.
Many economists say the housing recovery should withstand the recent rate increase. Mortgage rates are still quite low by historical standards.
Last month, builders broke ground on the most single-family homes since February and sought the most permits to build those homes in more than five years.
Homebuilder confidence remained at its highest level in nearly eight years in September, according to a survey by the National Association of Home Builders. But builders are starting to worry that sales may slow in coming months if rates keep rising, the survey found.Suggest a correction