US new home sales accelerate; lower mortgage rates a boost

WASHINGTON: Sales of new US single-family homes rebounded more than expected in August, the latest sign that the struggling housing market was starting to get a lift from lower mortgage rates.

The Commerce Department said yesterday new home sales increased 7.1 percent to a seasonally adjusted annual rate of 713,000 units last month, boosted by a surge in activity in the South and West. July’s sales pace was revised up to 666,000 units from the previously reported 635,000 units.

Economists polled by Reuters had forecast new home sales, which account for about 11.5 percent of housing market sales, increasing 3.5 percent to a pace of 660,000 units in August.

New home sales are drawn from permits

and tend to be volatile on a monthto-month basis. Sales surged 18.0 percent from a year ago. The median new house price rose 2.2 percent to $328,400 in August from a year ago. The housing market, the most sensitive sector to interest rates, has perked up in recent months in response to a sharp drop in mortgage rates. Reports last week showed housing starts and building permits jumped to a more than 12-year high in August, and home resales rose to the highest level in 17 months.

The 30-year fixed mortgage rate has dropped about 120 basis points from last year’s highs to an average of 3.73 percent, according to data from mortgage finance agency Freddie Mac. The Federal Reserve last week cut interest rates for the second time to offset the impact on the economy from a year-long trade war between the United States and China, and slowing global growth. The US central bank lowered rates in July for the first time since 2008. While other data from the Mortgage Bankers Association yesterday showed applications for loans to purchase a home fell last week, they were up solidly from a year ago. — Reuters