Housing Sales in July Hit 2-Year High : 1.4% Gain Comes on Top of Revised 2.2% Increase for June

WASHINGTON â€”  Housing sales rose 1.4% in July, hitting their highest level in almost two years, the government said Thursday.

New single-family homes were sold in July at an annual rate of 704,000 units, the highest annual sales pace since December, 1983, according to a report by the Commerce Department and the Department of Housing and Urban Development.

In addition, the government revised upward its sales figures from April through June to show more strength than originally reported. The June sales, which last month were reported to have dropped 0.1%, actually rose a strong 2.2%, following an even better 4.6% increase in May.

Economists had been puzzled last month when the government reported that new-home sales had dropped in June even though mortgage rates had continued falling to their lowest levels in five years.

Falling Interest Rates Cited

Commerce Department analyst Matthew Grinberg said the upward revisions stemmed from stronger sales data included in later sampling reports.

Private economists noted that the increase in new-home sales paralleled figures released earlier this week showing that sales of existing homes rose 1.6% in July to an annual rate of 3.11 million units, the highest pace for existing-home sales in almost five years.

Credit for the gains was given to falling interest rates, which have dropped to about 12.25% for fixed-rate mortgages, about 3 percentage points lower than a year ago.

“Today’s lower interest rates are causing the housing industry to shine as one of the economy’s few bright spots as many other sectors are winding down from the recent economic expansion,� said Jack Carlson, chief economist for the National Assn. of Realtors.

In Santa Barbara, Larry Speakes, spokesman for the vacationing President Reagan, said: “These are good, solid numbers and should represent good news for everyone associated with the home construction industry.�

Warren Lasko, executive vice president of the Mortgage Bankers Assn., said the sales gains were being reflected also in strong demand for Federal Housing Administration mortgages, which go primarily to first-time home buyers.

The average price of a new home climbed sharply in July to $101,900, up $3,300 from the June level. However, the median price of a new home fell by $3,500 to $82,100.

Analysts said the median price, which is the point where half the homes sell for more and half for less, provides a better picture of what housing prices are doing. They said the decline in the median price probably reflected a larger number of sales of smaller homes to first-time buyers.

The July gain in sales came from a strong 10.7% increase in the West and a 3.8% gain in the Midwest.