Sales of new homes in US rise 4.8 per­cent in Au­gust

Mort­gage rates tick up to 2.9%, re­main at his­toric lows

Arab Times - - BUSINESS -

NEW YORK, Sept 24, (AP): The mar­ket for newly con­structed homes in the US con­tin­ued its up­ward climb in Au­gust, de­spite the on­go­ing pan­demic and lin­ger­ing wor­ries about the fu­ture of the US econ­omy.

The Com­merce Depart­ment said sales new homes rose by a very strong 4.8% in Au­gust to a sea­son­ally-ad­justed an­nual rate of 1.01 mil­lion units. That’s on top of the mas­sive jump in new home sales that hap­pened in July, climb­ing that month by 13.9%.

The gains re­ported Thurs­day by the The Com­merce Depart­ment fol­low steep de­clines in March and April when COVID-19 in­fec­tions spread in the US The pace picked back up in the sum­mer, driv­ing home prices in many places to record highs.

Record low mort­gage rates as well as pent up de­mand from ear­lier in the year ap­pear to be driv­ing sales far more strongly than most economists had an­tic­i­pated.

“The Au­gust fig­ure is the first read­ing above 1 mil­lion since 2006, so both new and ex­ist­ing home sales reg­is­tered their best re­sults since 2006 in Au­gust,” wrote Stephen Stanley, chief economist at Amherst Pier­pont “The level beat ex­pec­ta­tions by over 100K.”

Dur­ing a broad sell-off this week across all ma­jor US stock mar­kets, shares of al­most ev­ery one of the na­tion’s largest home builders rose Thurs­day.

New home sales are now up 43.2% from this point last year.

The me­dian price of a new home sold was $312,800, ac­cord­ing to the Com­merce Depart­ment.

Mean­while, US av­er­age rates on long-term mort­gages rose slightly this week but re­main at his­tor­i­cally low lev­els.

Mort­gage buyer Fred­die Mac re­ported Thurs­day that the av­er­age rate on the 30-year home loan edged up to 2.90% from 2.87% last week. One year ago, the rate av­er­aged 3.64%.

The av­er­age rate on the 15-year fixed-rate mort­gage also rose, to 2.40% from 2.35% last week.

Low in­ter­est rates have made de­mand for hous­ing even stronger, but sup­ply re­mains scarce. The Na­tional As­so­ci­a­tion of Real­tors re­ported Wed­nes­day that the num­ber of ex­ist­ing homes for sale in Au­gust was 1.49 mil­lion units, a de­cline of 18.6% from this time last year.

Al­though sales of ex­ist­ing homes rose 2.4% in Au­gust to its high­est level since 2006, the lack of in­ven­tory is push­ing prices higher, caus­ing some con­cern. NAR said the me­dian price for an ex­ist­ing sin­gle-fam­ily home reached $315,000 in Au­gust, up 11.7% from last year.

Last month was the first time the me­dian price for a home breached $300,000.

Economists worry that the price in­creases could take buyers out of the mar­ket, es­pe­cially those seek­ing to own a home for the first time.

In this file photo, a ‘For Sale’ sign stands in front of a home that is in the process of be­ing sold in Mon­roe, Washington, out­side of Seat­tle. US av­er­age rates on long-term mort­gages rose slightly this week but re­main

at his­tor­i­cally low lev­els. Mort­gage buyer Fred­die Mac re­ported on Sept 24, that the av­er­age rate on the 30year home loan edged up to 2.90% from 2.87% last week. (AP)

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