New home sales climb in July despite steep mortgage rates

foxbusiness.com:

Redfin CEO Glenn Kelman says it's hard to fault the Fed for 'overdoing' rate hikes when there are other 'persistent' sources of inflation.

Sales of new U.S. homes climbed more than expected in July even as continued to confront high mortgage rates.

New single-family home purchases rose 4.4% to a seasonally adjusted annual rate of 714,000 units, the Commerce Department reported Wednesday. Economists surveyed by Refinitiv expected new home sales – which account for a small percentage of total sales – to come in at a rate of 705,000 units.

Sales are up about 31.5% from a year ago.

COMMERCIAL REAL ESTATE CRASH STILL LOOMING OVER US ECONOMY

«Despite affordability being at record lows, driven by historically high mortgage rates and recovery of prices this year, the new home market has continued to gain momentum as the lack of resale inventory has turned buyers to new construction,» said Crystal Sunbury, a real estate senior analyst at RSM. 

Homes in Rocklin, California, on Dec. 6, 2022. (David Paul Morris/Bloomberg via / Getty Images)

At the current pace of sales, it would take roughly 7.3 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level. 

The spike in sales indicates that buyers are still eager to buy homes, despite steep borrowing costs and elevated prices. That demand is keeping the housing market uncomfortably hot. 

The median price for a new home jumped to $436,700 from $416,700 the previous month – a nearly 5% increase. That is also far higher than the typical pre-pandemic level. 

MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU

The Federal Reserve's aggressive interest-rate hike campaign sent mortgage rates soaring above 7% last year for