US new home sales bounce back in August

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US new home sales bounce back in August

In August, new home sales bounced back despite high prices and rising mortgage rates that have pushed some buyers away.

Sales of newly built homes rose 28.8% in August from July, compared to the US Census Bureau's data from a year ago, according to a joint report from the US Department of Housing and Urban Development and the US Census Bureau. This comes after two consecutive months of decline.

Some 685,000 new homes were sold last month, at a seasonally adjusted annualized rate, up from a revised 532,000 in July. 686,000 newly built homes were sold a year ago.

The median price for a new home fell to $436,800, down from $439,400 the previous month.

New home sales had been dropping as prospective buyers saw their budgets stretched thin by long construction times, mounting costs and rising mortgage rates. The average interest rate for a 30 year fixed-rate mortgage fell to just below 5% in August, up from 3.22% in January.

New homes blew through estimates for August but it is likely an aberration caused by a dip in mortgage rates earlier in the summer, said Robert Frick, corporate economist at Navy Federal Credit Union.

He said that the market should expect September sales to fall back to normal with the 30 year fixed mortgage rate now pushing toward 7%.

He said that price increases for new homes continue to cool, which points to a more reasonably-priced housing market starting as soon as next year.