New Home Sales Up in August
A brief decline in mortgage rates helped to boost new home sales in August. However, sales are expected to move on a downward trend in the months ahead as rates have since moved higher. Builder sentiment continues to fall due to declining housing affordability and ongoing supply chain bottlenecks.
Sales of newly built, single-family homes in August increased 28.8 percent to a 685,000 seasonally adjusted annual rate from an upwardly revised reading in July, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New home sales are down 14 percent on a year-to-date basis despite the August upturn.
What NAHB has to say
“With housing affordability at a more than ten-year low and the Federal Reserve continuing to aggressively raise interest rates to rein in stubbornly high inflation, policymakers must find ways to reduce construction costs that are delaying home projects and putting upward pressure on home prices,” says Jerry Konter, chairman of the National Association of Home Builders and a home builder and developer from Savannah, Georgia.
“The sales gain in August reflects that there is clearly sidelined demand for housing, but it is being constrained by rising interest rates that are pricing many potential consumers out of the market, particularly entry-level buyers,” says NAHB Chief Economist Robert Dietz. “After a brief lull when mortgage rates fell below 5.3 percent for much of August, they have since jumped much higher in September and are now approaching 7 percent. The Fed should take careful note of the weakening of the housing market given the policy lag involved with monetary policy. Housing is a leading indicator of economic conditions.”