New home sales bounced back in August despite high prices and rising mortgage rates that have pushed some buyers away.
Sales of newly constructed homes 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 Urban Development and the US Census Bureau. This comes after two consecutive months of declines.
Some 685,000 new homes were sold last month, at a seasonally adjusted annualized rate, up from a revised 532,000 in July. A year ago, 686,000 newly constructed homes were sold.
Meanwhile, the median price for a new home fell slightly to $436,800, down from $439,400 the previous month.
New home sales had been trending lower as prospective buyers saw their budgets stretched thin by long construction times, mounting costs and rising mortgage rates. The average interest rate for a 30-year, fixed-rate mortgage dipped to just below 5% in August, up from 3.22% in January.
“New homes blew through estimates for August, but it’s likely an aberration caused by a dip in mortgage rates earlier in the summer,” said Robert Frick, corporate economist at Navy Federal Credit Union.
With the 30-year-fixed mortgage rate now pushing toward 7%, he said, the market should expect September sales to fall back to trend.
“The good news is price increases for new homes continue to cool, which points to a more reasonably-priced housing market starting as soon as next year,” he said.