US sales of new homes unexpectedly rise in a break from downturn

US sales of new homes unexpectedly rose in August, representing a break in an otherwise rapid descent this year for a housing market still at risk of further deterioration as mortgage rates climb.

Purchases of new single-family homes increased nearly 29% to a 685,000 annualised pace, government data showed on Tuesday (Sep 27). The August rate was firmer than the most optimistic forecast in a Bloomberg survey of economists.

The new-home sales are volatile; the report showed 90% confidence that the change in sales ranged from a 10.5% gain to a 47.1% increase.

Despite the increase, other figures point to a housing market that’s slowing as mortgage rates hit a 14-year high and begin to cool home-price appreciation. Borrowing costs risk rising further as Federal Reserve policy makers aggressively boost their benchmark rate to combat rapid inflation.

The Commerce Department’s report showed there were 461,000 new homes for sale at the end of the month, the most since March 2008.

The new-home sales report, produced by the Census Bureau and the Department of Housing and Urban Development, showed the median sales price of a new home was $436,800. That’s up 8% from a year ago, the smallest increase since November 2020. BLOOMBERG