U.S. existing home sales rise, boosted by lower rates


Jason Lange

WASHINGTON (Reuters) – U.S. home sales rose in May, boosted by lower interest rates for mortgages, giving a positive signal for the health of the U.S. economy.

The National Association of Realtors said on Friday existing home sales increased 2.5% to a seasonally adjusted annual rate of 5.34 million units last month. April’s sales pace was revised slightly higher to 5.21 million.

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Economists polled by Reuters had forecast existing home sales rising to a rate of 5.25 million units in May. Existing home sales, which make up about 90 percent of U.S. home sales, dropped 1.1% from a year ago. That was the 15th straight year-on-year decrease in home sales.

Demand this years is being fueled by lower mortgage rates, which have dropped since the Fed suspended its three-year monetary policy tightening campaign. The Fed said this week that nearly half of its policymakers expect rate cuts this year due to concerns about the economic outlook.

The 30-year fixed mortgage rate has dropped to an average of 3.84% from more than a seven-year peak of about 4.94% in November, according to data from mortgage finance agency Freddie Mac.

The NAR said last year’s revamp of the U.S. tax code, which reduced the amount of mortgage-interest payments homeowners could deduct, was hurting sales of homes priced $1 million and above.

Reporting by Jason Lange; Editing by Paul Simao


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