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WASHINGTON, DC-Even as the housing market recovery continues gathering steam, there are signs of the recovery faltering. Although National Association of Realtors data showed that existing home sales—including condominiums and co-ops along with single-family houses—rose 6.5% in July from the month before, US Commerce Department figures issued Friday showed sales of newly built product dropped more than twice as fast as those of previously owned homes increased, losing 13.4% to 394,000. The specter of rising interest rates may have both helped existing home sales and hindered transactions involving new stock.

NAR’s chief economist, Lawrence Yun, alluded to this in comments on the July spike in existing home sales. “Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines,” he said last week. “The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers.”

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