Existing Home Sales

In this Friday, Aug. 16, 2019, photo for sale signs beckon buyers to homes along Park Avenue in Richmond, Va. On Wednesday, Aug. 21, the National Association of Realtors reports on sales of existing homes in July. (AP Photo/Steve Helber)

WASHINGTON (AP) — U.S. home sales increased 2.5% in July, a sign that lower mortgage rates have produced a spurt of home-buying.

The National Association of Realtors said Wednesday homes sold last month at a seasonally adjusted annualized rate of 5.42 million units, up from 5.29 million in June.

Average interest rates on 30-year mortgages have fallen to 3.60%, the lowest in nearly three years. Cheaper borrowing costs have enabled sales to rise 0.6% from a year ago, ending 16 consecutive months of annual sales declines.

Jennifer Lee, a senior economist at BMO Capital Markets, said the sales growth should ease concerns about a weakening economy.

The low rates are providing a boost to a housing sector where affordability remains an obstacle for many would-be buyers. Home prices have risen fastest for the bottom half of the market since 2012, making it harder to save for a down payment or manage monthly payments at a higher mortgage rate.

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