New US home sales jump more than 20% as rates fall
August surge driven by lower mortgage costs; labor market weakness could cap momentum
New single-family home sales in the United States jumped in August, rising 20.5% to a seasonally adjusted annual rate of 800,000 units, the Commerce Department’s Census Bureau said Wednesday. The July pace was revised higher to 664,000 from 652,000. New-home sales are counted at contract signing, so month-to-month results can be volatile and subject to revisions. The August gain followed a decline in mortgage rates that coincided with the Federal Reserve’s move toward easing monetary policy.
Mortgage rates have fallen in recent weeks, helping to spur demand for new homes. The Fed cut its benchmark rate last week by 25 basis points to a target range of 4.00% to 4.25%, and projected reductions to continue at a steady pace through 2025. Freddie Mac reported the 30-year fixed-rate mortgage averaged 6.26% last week, an 11-month low, down from about 7.04% in mid-January. The report notes that new-home sales accounted for roughly 14% of total U.S. home sales. Analysts surveyed by Reuters had expected August sales to ease to about 650,000.
Still, the labor market remains a potential headwind. Nonfarm payrolls gains averaged 29,000 per month in the three months through August, well below the 82,000 per month logged during the same period a year earlier. The softer pace of hiring could temper demand for housing even as borrowing costs fall. August’s 15.4% year-over-year increase underscores that the sector remains sensitive to financing conditions and overall economic momentum, rather than a simple upward trajectory.
Economists caution that while the August jump is notable, it does not guarantee a durable rebound in overall home sales, given the fragility of the labor market and affordability constraints. The Commerce Department noted that monthly results for new-home sales can be revised, sometimes substantially, as additional data become available. The broader housing market will continue to hinge on the path of interest rates and the strength of job creation in the months ahead.