US New-Home Sales Fall as Mortgage Rates Drop Demand By Bloomberg

&copy Bloomberg. A housing development in Louisville, Kentucky is currently under construction.

(Bloomberg). — September saw a drop in sales of new homes in the United States. This is due to a decline in demand as would-be buyers are forced out of the market by decades-high mortgage rates.

The number of single-family home purchases fell 10.9% to 603,000 per year after an unexpected increase in August, according to government data. A Bloomberg survey of economists found that the median estimate was for a rate of 580,000.

These figures reflect a decline in housing demand, as the Federal Reserve aggressively increases interest rates to combat the worst inflation for a generation. Last week’s mortgage rates reached 7.16%, the highest level since 2001. That’s sapping affordability, sidelining prospective buyers and leading some measures of home prices to fall.

So far, that hasn’t shown up in prices of new homes. The Census Bureau and Department of Housing and Urban Development produced the report. It showed that the median sale price of a new house rose 13.9% to $470,000.

As of the end, 462,000 new homes were available for sale, the highest number since 2008. However, the vast majority of these homes are still under construction or have not started. The current sales pace would take 9.2 month to exhaust the supply of homes. This compares with 8.1 months in august and 6.1 months a previous year.

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Stocksak Editorial

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