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# A prolonged period of low mortgage rates resulted

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Joined: 18 May 2015
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A prolonged period of low mortgage rates resulted  [#permalink]

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04 Jun 2015, 03:59
3
1
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Difficulty:

55% (hard)

Question Stats:

58% (01:24) correct 42% (02:39) wrong based on 196 sessions

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A prolonged period of low mortgage rates resulted in a period of the most robust home sales ever. At the same time, the average sale price of resale homes actually dropped, when adjusted for inflation.

Which of the following, if true, would explain the apparent contradiction between the robust home sales and the drop in the average sale price of resale homes?

A) The inflation rate during this period exceeded the increase in the average salary, thus preventing many buyers from securing mortgages.

B) Resale homes represent the best value on the real estate market.

C) Without the adjustment for inflation, the price of resale homes actually increased by a very slight amount.

D) The decrease in mortgage rates was accompanied by a widening of the types of mortgages from which borrowers could choose.

E) The increase in home sales was due entirely to an increase in the sale of new homes.

_________________

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Sam GM

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Joined: 17 Jul 2014
Posts: 2717
Location: United States (IL)
Concentration: Finance, Economics
GMAT 1: 650 Q49 V30
GPA: 3.92
WE: General Management (Transportation)
Re: A prolonged period of low mortgage rates resulted  [#permalink]

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02 Jan 2016, 15:56
gmt1 wrote:
A prolonged period of low mortgage rates resulted in a period of the most robust home sales ever. At the same time, the average sale price of resale homes actually dropped, when adjusted for inflation.
Which of the following, if true, would explain the apparent contradiction between the robust home sales and the drop in the average sale price of resale homes?

ok, so I'll be the first to comment:

we have more home sales, but sale price of resale homes dropped.
what can be the cause.
a correct answer, if put in the below formula, would yield a valid explanation:

because - correct answer - , home sales increased, while in the same time, the price of resale homes dropped.

E) The increase in home sales was due entirely to an increase in the sale of new homes.
only E perfectly fits in here.
SVP
Joined: 12 Dec 2016
Posts: 1855
Location: United States
GMAT 1: 700 Q49 V33
GPA: 3.64
Re: A prolonged period of low mortgage rates resulted  [#permalink]

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25 Aug 2017, 18:06
It took me more than a minute to understand that if more people buy houses, the price will increase.

I did not choose E because I thought E conflicts with the question. After a few weeks of being away from GMAT, particularly critical reasoning, I am forgetting gmat skills.
Re: A prolonged period of low mortgage rates resulted &nbs [#permalink] 25 Aug 2017, 18:06
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# A prolonged period of low mortgage rates resulted

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