This has got to be the present cannibalizing the future.
New home sales rose to a record level in May despite rising mortgage rates, a government report showed Thursday, as the annual rate of sales came in well above Wall Street expectations.Yah, no kidding.
The Census Bureau reported new home sales at an annual rate of 1.37 million for the month, up nearly 15 percent from a revised annual rate of 1.19 million in April. . . .
Mortgage rates have increased steadily since hitting near 40-year lows in March. But rates are still historically low and the improving employment outlook is seen supporting home building and purchases in the face of the mortgage rate climb.
Some of the gains in home purchases may have been people who had planned to buy a home at some point this year rushing to complete a purchase before rates climb any higher.
Back in June 2003 the rate on conventional fixed-rate first mortgages stood at 5.21%. As recently as March 2004 they were 5.38%, but as of the end of last week they stood at 6.32%, up nearly 100 basis points. Yet the market hasn't even so much as hiccupped. If prices have anything to do with actual economic behavior, we should see a marked drop-off in July after the Fed raises rates next week.