Please try another search
© Reuters. New townhomes are seen under construction while building material supplies are in high demand in Tampa, Florida, U.S., May 5, 2021. REUTERS/Octavio Jones
WASHINGTON (Reuters) - Sales of new U.S. single-family homes unexpectedly increased in August, but the rebound is likely temporary, with the 30-year fixed mortgage rate soaring to levels last seen during the Great Recession.
New home sales surged 28.8% to a seasonally adjusted annual rate of 685,000 units last month, the Commerce Department said on Tuesday. July's sales pace was revised higher to 532,000 units from the previously reported 511,000 units.
Sales increased in all four regions, accelerating 66.7% in the Northeast. Economists polled by Reuters had forecast new home sales, which account for about 10% of U.S. home sales, declining to a rate of 500,000 units.
Sales dipped 0.1% on a year-on-year basis in August. They peaked at a rate of 993,000 units in January 2021, which was the highest level since the end of 2006.
The Federal Reserve's aggressive monetary policy tightening, marked by oversized interest rate increases, has weakened the housing market. The U.S. central bank last week raised its policy interest rate by 75 basis points, its third straight increase of that size.
It signaled more large increases to come this year. Since March, the Fed has hiked its policy rate from near zero to its current range of 3.0% to 3.25%, raising the risks of a recession next year.
Mortgage rates have increased even faster. The 30-year fixed mortgage rate averaged 6.29% last week, the highest since October 2008, from 6.02% in the prior week, according to data from mortgage finance agency Freddie Mac (OTC:FMCC).
Data last week showed sales of previously owned homes falling for a seventh straight month in August, while permits for future homebuilding plunged to levels last seen during the first wave of the COVID-19 pandemic in the spring of 2020.
The median new house price in August was $436,800, an 8.04%increase from a year ago. There were 461,000 new homes on the market at the end of last month, up from 459,000 units in July. Houses under construction made up 66.4% of the inventory, with homes yet to be built accounting for 23%.
Completed houses accounted for 10.6% of the inventory, well below a long-term average of 27%. At August's sales pace it would take 8.1 months to clear the supply of houses on the market, down from 10.4 months in July.
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.