U.S. new home sales jumped 7.1% in August, as low mortgage rates pull buyers into the housing market.
The Commerce Department said Wednesday that new homes sales increased to a seasonally adjusted annual rate of 713,000, up from a revised 666,000 in July. So far this year, sales have risen a healthy 6.4%.
Trade tensions and slower economic growth have pushed down interest rates, helping homebuyers for the moment. But new construction has yet to meet the demand from likely buyers, so the sales gains could translate into higher prices.
August’s average sales price rose 6.1% from a year ago to $404,200, a record level not adjusted for inflation.
Much of last month’s sales growth came from homes that have yet to be built, a sign that low mortgage rates are behind the surge in purchases. The 30-year mortgage rate averaged 3.73% last week, down from 4.65% a year ago according to mortgage buyer Freddie Mac.
Home sales climbed in the South and the West, but slipped in the Northeast and the Midwest. The 16.5% monthly sales gain in the more expensive West was reflected by an increase in purchases of homes priced above $400,000 relative to July.