U.S. new home sales rise to eight-month high amid rising mortgage rates

U.S. new home sales rose 6.4% in August to a seasonally adjusted annual rate of 684,000 units, marking an eight-month high and exceeding economist forecasts. This surge was driven largely by significant growth in the Midwest and South, though sales declined in the Northeast and West. Builders have utilized price cuts and incentives to bolster demand amid rising borrowing costs.

Mortgage rates have seen a significant upward trend, with the average 30-year fixed-rate mortgage crossing the 7% threshold for the first time since early 2025. This increase is linked to rising 10-year Treasury yields, influenced by geopolitical tensions in the Middle East and persistent inflation. The 7% mark is viewed by economists as a psychological barrier that could impact market activity.

While new home sales showed resilience, broader affordability challenges persist. The median price for new homes stood at $393,700, a slight monthly increase but down from previous years. Inventory levels for new homes remain elevated at an 8.5-month supply, suggesting a market that is transitioning despite the pressure of high interest rates.