Sales of new U.S. homes rose 7.9% — the fastest growth since the beginning of the year — to a seasonally adjusted annual rate of 421,000 in August, with rising results in three of four regions, according to the U.S. Department of Commerce.
Economists polled by MarketWatch had expected sales to climb in August to a rate of 420,000, compared with an original July estimate that pegged the rate at 394,000. On Wednesday, the government revised July’s rate to 390,000.
The new-home-sales series is volatile, and monthly results can be difficult to interpret. In August, the confidence interval for new-home sales was plus or minus 14.6%, meaning that government analysts think that sales growth likely fell somewhere within a range of negative 6.7% to positive 22.5%.
Looking at trends, over the three months through August, the average rate of new-home sales was 422,000, up 15% from an average rate of 368,000 during the year-earlier period.
Though there are signs that rising mortgage rates are slowing the housing market — the average rate for the popular 30-year fixed-rate mortgage has climbed more than one percentage point since early May — Wednesday’s data point to a housing market that continues to gather steam. New-home sales in August were up 12.6% from the year-earlier period. Pent-up demand and mortgage rates that still are relatively low have been supporting sales.
While rising rates hurt some borrowers’ ability to buy homes, there’s evidence that others buyers are rushing to close deals soon before affordability declines further.
“The extent to which a rise in mortgage rates has affected momentum is still unclear,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Indeed, home builders are reporting rising quarterly earnings and are the most confident in almost eight years. And economists expect the housing market to continue to add to economic growth this year. There’s certainly room to grow: New-home sales remain far below a peak rate of almost 1.4 million in 2005.