After reporting a sharp pullback in U.S. new home sales in the previous month, the Commerce Department released a report on Wednesday showing new home sales rebounded by much more than expected in the month of July.
The Commerce Department said new home sales spiked by 4.4 percent to an annual rate of 714,000 in July after tumbling by 2.8 percent to a revised rate of 684,000 in June.
Economists had expected new home sales to jump by 1.2 percent to a rate of 705,000 from the 697,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 773,000 in February 2022.
New home sales in the Midwest helped lead the surge, skyrocketing by 47.4 percent to an annual rate of 84,000 in July.
The report said new home sales in the West also soared by 21.5 percent to a rate of 181,000, while new home sales in the Northeast slumped by 2.9 percent to a rate of 33,000 and new home sales in the South tumbled by 6.3 percent to a rate of 416,000.
“We expect new home sales to come under pressure in the months ahead as labor markets soften and homebuying affordability worsens after the latest spike in mortgage rates to a 22-year high,” said Nancy Vanden Houten, U.S. Economist at Oxford Economics.
She added, “The jump in rates may hurt new home sales less than existing home sales if home builders again increase their use of incentives to boost sales in a high-rate environment.”
The Commerce Department also said the median sales price of new homes sold in July was $436,700, up 4.8 percent from $416,700 in June but down 8.7 percent from $478,200 a year ago.
The estimate of new houses for sale at the end of July was 437,000, up 2.1 percent from 428,000 in June but down 4.8 percent from 459,000 in July 2022.
The unsold inventory represents 7.3 months of supply at the current sales rate. The months of supply is down from 7.5 in June and 10.1 a year ago.
A separate report released by the National Association of Realtors on Tuesday showed existing home sales in the U.S. slumped by much more than expected in the month of July.
NAR said existing home sales tumbled by 2.2 percent to an annual rate of 4.07 million in July after plunging by 3.3 percent to an annual rate of 4.16 million in June. Economists had expected existing home sales to edge down to an annual rate of 4.15 million.
Existing home sales decreased for the fourth time in the past five months, falling to their lowest annual rate since hitting 4.00 million in January.
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