Sales of new homes in the United States recorded a sharp decline in August, which however follows a significant rebound in July, according to data released Tuesday by the Commerce Department, as high interest rates weigh on real estate purchases.
In August, 675,000 new homes were sold, at an annualized rate – a monthly figure projected over a year at this sales rate -, a decrease of 8.7% compared to Julyfor which sales have also been revised upwards (739,000 instead of 714,000 initially announced).
The decline is stronger than expected by analysts, who forecast 695,000 sales, according to the consensus published by briefing.com. The level of sales is nevertheless 5.8% higher than in August 2022.
If the median price fell compared to July, to 430,300 dollars against 436,600, the average price increased, to 514,000 against 507,900. “Consistently high real estate rates, above 7.0%, continue to erode manufacturers’ confidence “, highlighted the National Association of Home Builders (NAHB) on September 18, during the release of its monthly index produced with Wells Fargo Housing.
Real estate rates, an obstacle for buyers
Starts of new homes, which bring properties to the market, even fell in August to their lowest level since May 2020. “Higher real estate interest rates (…) constitute an obstacle for buyers. But the limited availability of existing homes for sale has shifted demand towards new homes,” commented Rubeela Farooqi, chief economist for HFE, in a note.
These high rates encourage many current owners to keep their property, waiting to be able to access a less expensive loan to move, which reduces the supply of existing properties on the market. Home loan interest rates are at their highest in 21 yearsand reach 7.19% in the United States, for a 30-year fixed loan – the most common –, according to data from the real estate refinancing group Freddie Mac.
And they should not decline immediately, their evolution being linked to those of the American central bank (Fed). If it maintained its rates stable on Wednesday, she warned that she planned to raise them again by the end of the yearand to maintain them in 2024 at a higher level than what it previously envisaged.