Sales of newly built homes dropped as mortgage rates jumped.
Higher mortgage rates weighed on affordability.Sales of newly built homes fell 8.7% in August from July, to a seasonally adjusted annualized pace of 675,000 units, according to the U.S. Census Bureau.Get Tri-state area news and weather forecasts to your inbox.The Census count is based on signed contracts during the month, and mortgage rates took a sharp jump higher. The average rate on the popular 30-year fixed loan ended July at 7.04%, according to Mortgage News Daily. By Aug. 22 it was at 7.
"Very stretched affordability means demand will be unable to recover in the near term, causing new home sales to fall back from 675,000 annualized in August to 600,000 annualized by the end of the year," writes Imogen Pattison, assistant economist at Capital Economics. The median price of a newly built home sold in August was $430,300, a drop of 2% compared with August of last year. Homebuilders have been lowering prices as well as offering more incentives, like buying down mortgage rates. They had slowed those incentives last spring, when rates went below 7%, but they are ramping them up again.
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