US Home Prices Hit Record High As Sales Grow

Sales of existing homes rose higher in the United States last month, snapping a four-month streak of declines as prices rose to a new record high, industry data released Thursday said.

Sales of houses, flats and townhomes rose 1.4 percent compared to May to a seasonally-adjusted annual rate of 5.86 million, the National Association of Realtors (NAR) said.

Rock-bottom borrowing rates have added fuel to the already-strong housing market, but tight supplies caused by a shortage of workers and rising materials costs have driven prices up and dampened sales in recent months.

Inventory rose 3.3 percent in the month, but even so, the median home price broke the record set in May, jumping to US$363,300, which was more than 23 percent higher than a year ago, the report said. That marks 112 straight months of increases, and prices rose in every region of the country.

While "home prices are in no danger of a decline due to tight inventory conditions," the pace should slow by the end of the year, NAR chief economist Lawrence Yun said in a statement.

"Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available."

However, Ian Shepherdson of Pantheon Macroeconomics said he expects home sales to "fall sharply" in coming months after an "unsustainable surge," and pointed to a decline in mortgage applications.

"This modest increase in sales is just a brief diversion against the downward trend," he said in an analysis. (AFP)