New-Home Sales Jump 7.9% as Higher Rates Draw More Buyers from Sidelines

New-Home Sales Jump 7.9% as Higher Rates Draw More Buyers from SidelinesSales of new homes in August made an impressive showing, but the surge in activity came on the heels of a dip the previous month caused by the mid-summer jump  in mortgage rates.
Sales of newly built, single-family homes rose 7.9 percent to a seasonally-adjusted annual rate of 421,000 units in August, according to newly released figures from HUD and U.S. Census Bureau.
The median price of new homes sold was $254,600.
“We expect to see more buyers coming back to the market as the psychological effects of the rate gains continue to wear off, particularly since, even after the recent spike, mortgage rates remain exceptionally favorable on a historic basis,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.
But a six-month supply of homes is considered healthy, and the market is still dealing with a shortage. Currently, it is taking five months to run through a supply of new homes. The total inventory rose for a seventh consecutive month in August to 175,000 units.
NAHB Chief Economist David Crowe said that the housing market is only about halfway back to what would be considered a “sustainable level of activity in a normal economy.”
Factors that are still weighing heavily ont the market are “consumers’ concerns about interest rates, as well as weak job growth and uncertainty about what’s happening in Washington,” Crowe said.
Three out of four U.S. regions posted solid gains in new-home sales activity in August.
Sales rose 8.8 percent in the Northeast, 19.6 percent in the Midwest and 15.3 percent in the South for the month. The West was the exception to the rule, with a 14.6 percent decline.
While the months’ supply of new homes edged down to 5.0 due to the quicker sales pace in August, the total inventory rose for a seventh consecutive month, to 175,000 units.

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