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 says homes sold last month at a seasonally adjusted annualized rate of 5.42 million units.
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.
Still, sales could be limited by a shortage of listings and home prices that are rising faster than incomes. The number of properties on the market has fallen 1.6% during the past 12 months to 1.89 million units, giving buyers fewer options.
The median sales price climbed 4.3% from a year ago to $280,800.