Sales of New U.S. Single-Family Homes Rise

(Reuters) – Sales of new U.S. single-family homes rose to their highest level in over a year in July, following a drop in mortgage rates which boosted demand, providing further evidence of a recovering housing market.

New home sales surged by 10.6% to a seasonally adjusted annual rate of 739,000 units last month, the highest level since May 2023, according to the Commerce Department’s Census Bureau on Friday. This marked the steepest increase in sales since August 2022.

The sales rate for June was revised upward to 668,000 units from a previously reported 617,000 units.

Economists surveyed by Reuters expected new home sales, which constitute over 10% of U.S. home sales, to slightly rise to a rate of 625,000 units.

New home sales are recorded at the signing of a contract, but they can fluctuate significantly from month to month. In July, sales also rose by 5.6% compared to the previous year.

This week, the average rate on a 30-year fixed-rate mortgage was 6.46%, the lowest since May 2023, and more than half a percentage point lower than the same period last year, data from mortgage finance agency Freddie Mac indicated.

The mortgage rates have decreased from a six-month high of 7.22% in early May, following the Federal Reserve’s signals suggesting a potential interest rate cut in September, which could further boost sales in the coming months.

Other housing data has shown mixed results. U.S. existing home sales exceeded expectations in July, reversing a four-month decline. However, single-family housing starts fell to a 16-month low in July, likely impacted by Hurricane Beryl, as permits for future construction also slightly decreased.