Housing Market Stays Hot

Sales of existing homes set a new record in July with home prices shooting up at the fastest pace in nearly 25 years.

The National Association of Realtors reported that existing homes were sold at a seasonally adjusted annual rate of 7.33 million units last month, a gain of 2.7 percent from the May sales pace.

The torrid sales pace helped to push the median price of an existing home up to a record of $219,000 last month, a gain of 14.7 percent from the median, or midpoint, for prices a year ago. That was the biggest jump in prices since November 1980.

The June performance was better than expectations as the nation's housing market continued to flash signals that some parts of the country could be in the grip of what Federal Reserve Chairman Alan Greenspan last week called a "speculative fervor."

The concern is that housing prices are rising at a pace that is unsustainable and that in some parts of the country could start declining if rising interest rates begin to weaken demand.

Such a development could spell trouble for homeowners who find the value of their homes falling below the value of the mortgage they obtained to finance the purchase.

For June, sales were strong in all regions of the country. Sales in the West rose by 5.5 percent. Sales were up 3.4 percent in the Northeast, 1.9 percent in the Midwest and 1.1 percent in the South.