Home sales ‘last hurrah’ for next 12 months

By Diana Olick

September 1 (Bloomberg) — U.S. home sales in August rose to their highest level in six years, even higher than during the recent home buyer tax credit. This news came on the heels of the Federal Reserve’s announcement that it would continue to fuel the mortgage market, keeping rates from rising dramatically. Still, Realtors were uncharacteristically pessimistic in their predictions for sales this fall.

“We are getting early signals from lock boxes that show a significant change in direction in August,” said Lawrence Yun, chief economist for the National Association of Realtors, referring to the small key boxes that hang on the doors of for-sale homes. The number of times they were opened in August dropped dramatically, signaling a big drop in potential buyer traffic.

Yun claimed the jump in August sales was based on fear of rising rates. August numbers are based on closings for contracts that were likely signed in June. June saw the biggest spike in mortgage interest rates.

“That hurried people into making a decision,” said Yun. “It was the last hurrah for the next 12 to 18 months.”