Existing Home Sales Rise in April, and Home Prices Rise Too

The week brought more signs that the housing market is showing continued improvement, and prospects of higher interest rates from the Federal Reserve won't kill the ongoing recovery, according to one economist.

On Friday, the National Association of Realtors reported that existing home sales for April came in better than expected, increasing 1.7% to an annual rate of 5.45 million units. Earlier in the week, housing starts and building permits were also strong.

Ryan Wang, U.S. economist at HSBC, says the market will be "steady as she goes," regardless of whether the Federal Reserve increases rates next month. "If the Fed were to raise rates only one time this year, which I think is most likely, then we probably won't see much of an increase in mortgage rates. They'll remain low by historical standards," says Wang.

He also points out that an increase in rates by the Fed won't necessarily feed into the mortgage market. "If you think back to where mortgage rates were back in December, they were at 4%. And now they're closer to 3.6%, after the Fed raised rates last December."

Wang adds that the housing market is being supported by the fact that consumers are in better financial shape now. "What we're seeing is favorable credit conditions for most households and even more importantly, it's the improvement in the labor market," he says. The median price for existing homes rose 6.3% in April, to $232,500. "Prices have been rising about 5 to 6% per year for the last several years. If you look on a national basis, average prices have increased by about 30% since 2010."

Friday's housing report did show some unevenness across the country. In the Midwest, existing home sales surged 12.1%, but rose only 2.8% in the Northeast. The South and West posted declines in sales.