New home sales rebounded in August despite high prices and rising mortgage rates that put off some buyers.
New home sales jumped 28.8% in August from July and were down just 0.1% from a year ago, according to a joint report from the US Department of Housing and Development. urban and the US Census Bureau. This comes after two consecutive months of decline.
Some 685,000 new homes were sold last month, at a seasonally adjusted annualized rate, compared to a revised 532,000 in July. A year ago, 686,000 newly built homes were sold.
Meanwhile, the median price of a new home fell slightly to $436,800 from $439,400 the previous month.
New home sales had been on a downward trend as potential buyers saw their budgets squeezed by long construction times, rising costs and rising mortgage rates. The average interest rate on a 30-year fixed-rate mortgage fell to just below 5% in August, from 3.22% in January.
“New homes beat August estimates, but that’s likely an outlier caused by lower mortgage rates earlier this summer,” said Robert Frick, business economist at Navy Federal Credit Union.
With the 30-year fixed mortgage rate now pushing around 7%, he said, the market should expect September sales to return to trend.
“The good news is that new home price increases continue to moderate, pointing to a more reasonably priced housing market from next year,” he said.