New-home sales up after initial shock of higher mortgage rates

New-home sales grew 7.9 percent in August, with total sales up 12.6 percent from a year ago, after a decline in the previous month due to rising mortgage rates, NAFCU Staff Economist Doug Christman said.

August’s new-homes sales rose to 421,000 annualized units after July’s sharp decline to 390,000 annualized units.

Three of the four regions showed sales increases for August. Monthly sales in the Midwest region rose 19.6 percent, followed by the South (15.3 percent) and the Northeast (8.8 percent). Sales in the West fell 14.6 percent.

Sales rose from last year in the South (28.2 percent), the Northeast (27.6 percent) and the Midwest (15.1 percent), while sales in the West fell 21.2 percent.

Months of available inventory were five months of supply in August, down from a revised 5.2 months of supply in July. The number of unsold homes left on the market grew to 175,000 units. The number of unsold homes is up 22.4 percent from a year ago.

The Census Bureau said the median new-home price, non-seasonally adjusted, fell from $256,300 in July to $254,600 in August, up from $253,200 a year ago.

“Median home price growth has moderated in recent months as rising interest rates have made home ownership less affordable,” Christman said in a NAFCU Macro Data Flash report. “However, the Federal Reserve’s decision to maintain asset purchases at the current pace should help keep interest rates in check in the near term. The housing market is expected to continue to support the broader economic recovery throughout the year.”

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