NEW YORK ( TheStreet) -- Sales of existing homes rose sharply in July, with median prices posting double-digit increases, as buyers rushed to buy homes and lock in interest rates before rates move up further. According to the National Association of Realtors, existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 6.5% to a seasonally adjusted annual rate of 5.39 million in July from a downwardly revised 5.06 million in June, and are 17.2% above the 4.60 million-unit pace in July 2012. Economists polled by Bloomberg expected existing home sales to rise to an annualized rate of 5.15 million units in July from June's original estimate of 5.08 million homes. The July report represents the first existing home sales report that reflects the impact of rising rates. Interest rates moved higher by as much as 1 percentage point in the less than two-month period of May and June. But the data still does not show any sign of a slowdown in prices. This is possibly because buyers are being motivated by expectations of future interest rates and are trying to lock in rates when they are still low. "Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," Lawrence Yun, chief economist for the NAR said. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers." According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.37% in July from 4.07% in June. The national median home price was $213,500 in July, up nearly 14% from a year earlier. Median prices have increased year-over-year for 17 consecutive months and are now only 7.3% below July 2006 peak. Prices are climbing as the share of distressed sales decline and inventory conditions remain tight. Distressed sales, which include short sales and foreclosure that sell at discounts to market price, accounted for 15% of sales in July, same as June. That is the lowest level since October 2008.