"The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now," Lawrence Yun, chief economist for the National Association of Realtors said in a release. "As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase."
The original forecast was for 5.48 million units this year.
The median home price last month was $234,000, up 5.6% year-over-year. July also marked 41 consectutive months of year-over-year gains.
Those gains, however, could eventually have a negative impact on originator business, as sales are expected to slow.
"Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," Yun said. "Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."
And one important broker client base – first-time buyers – are struggling to purchase.
"The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," Yun said. "Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options."
These latest figures strengthen economists’ argument that the Fed will move to increase its benchmark rate at next month’s meeting.
Existing home sales increased 2% to 5.59 million in July, surpassing expectations.