New home sales tumble in August amid rising mortgage rates
Taylor Morrison CEO Sheryl Palmer discusses the headwinds facing the housing market after a drop in August existing home sales on 'The Claman Countdown.'
Sales of new U.S. homes unexpectedly dropped in August as a spike in mortgage rates weighed heavily on consumer demand.
New single-family home purchases plummeted 8.7% to a seasonally adjusted annual rate of 675,000 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 700,000 units.
Sales remain up about 5.8% from the same time one year ago.
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«The pace of new home construction is slowing, but there is still a large backlog of homes in the funnel that should continue making their way to the market in the coming months, giving more opportunities for home buyers to jump on the new construction train,» said Nicole Bachaud, Zillow senior economist.
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 7.8 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level.
The decline in sales indicates that a resurgence in mortgage rates is pushing many would-be buyers out of the market. That slowdown in demand contributed to a decline in prices last month.
The median price for a new home fell to $430,000 from $436,700 the previous month. Still, that remains far higher than the typical pre-pandemic level.
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