Existing home sales in the United States increased 2% to 5.59 million in July, surpassing expectations and lending support to belief the Fed will raise its overnight rate in September.
"The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now," Lawrence Yun, chief economist for the National Association of Realtors said in a release. "As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase."
The original forecast was for 5.48 million units this year.
These latest figures strengthen economists’ argument that the Fed will move to increase its benchmark rate at next month’s meeting given the economic impact a healthy real estate market continues to have on the overall US economy. Any move in the US is expected to impact Canadian bond markets and fixed mortgage rates.
The median home price in the States last month was $234,000, up 5.6% year-over-year. July also marked 41 consectutive months of year-over-year gains.
Those gains, however, could eventually have a negative impact on broker business in the US, as sales are expected to slow.
"Despite the strong growth in sales since the spring, declining affordability could begin to slowly dampen demand," Yun said. "Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."
Strong price grow in Canada has ignited similar concerns about a slowing market. It's a concern that hasn't yet comae to fruition.