Sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said yesterday.
The sales increase sparked a rise in home prices. The median price for a new home rose to $173,100, up 4 percent from a year ago.
Mortgage rates fell last week to the lowest level for the year. The average rate on a 30-year loan ticked up slightly to 4.87 yesterday, according to financial publisher HSH Associates. That was just above the record low of 4.83 percent in December.
Worries over the European debt crisis have sent investors rushing into the safety of US credit markets. Rates had been expected to rise after the Federal Reserve ended a mortgage-buying program that pushed rates down to record lows last year.
The uncertainty in Europe is a mixed blessing for the US housing market. It has helped drive rates down for anyone who’s closing a home purchase or looking to refinance.
But it’s bad news for most Americans with adjustable rate mortgages. About 70 percent of such loans reset based on the London Interbank Offered Rate. That’s the rate large international banks use when extending short-term loans to one another. This rate has been rising because of the turmoil in Europe, but it is still well below year-ago levels.
In a healthier economy, extraordinarily low mortgage rates would pump up demand for homes. But economists say the job market is too weak and credit too tight.
The tax credit’s impact is expected to linger for a couple of months. Buyers had to have a signed sales contract by April 30, but they have until the end of June to complete their sales. First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500.
