New-home sales jumped 6.4 percent in August to a seasonally adjusted annual rate of 684,000, the biggest gain since February. Census Bureau data released on Sept. 24 showed buyers largely ignoring the highest mortgage rates in more than two years.
It was a sharp turnaround from July, which was revised to a 4.3 percent decline. The median price of a new house sold rose 0.4 percent to $393,700 from $392,200, but it sits firmly below the almost $418,000 of August 2025.
Borrowing costs keep climbing
Mortgage rates have risen since early March, tracking Treasury yields. The benchmark 10-year yield is at its highest since July 2007, and the average 30-year fixed rate stood at 7.37 percent on Sept. 24, a more than two-year high according to Mortgage News Daily.
Byron Anderson, head of fixed income at Laffer Tengler Investments, sees no quick relief. “We are firmly setup for higher yields in this environment,” he said in an emailed note to The Epoch Times. “Rate hikes do not solve Iran, oil, AI boom, or inflation. They do increase borrowing costs for everyone else in the market, which will eventually hit labor and the consumer if the Fed gets aggressive with hikes.”
Builders and the South
Builders are leaning on incentives and price adjustments. Bill Owens, chairman of the National Association of Home Builders, said they “continue to use incentives and pricing adjustments to support buyers as limited existing-home inventory helps sustain the new-home market.” Prices on new homes have drifted lower since the pandemic peak.
A sizable share of the activity was in the South, while demand weakened in the Northeast and West. Jeffrey Roach, chief economist at LPL Financial, called that good news for southern economies, since “the second-order effects of rising housing activity should provide support for retail spending and related consumer activity across the region.”
Supply stayed tight. At the end of August 483,000 new houses were for sale, unchanged from the month before and below 493,000 a year earlier. That works out to 8.5 months of supply at the current pace.
Roach does not expect housing to add much to economic growth. Many owners who locked in 3 percent mortgages in 2020 and 2021, after the Federal Reserve’s emergency rate cuts, are reluctant to sell, which leaves the existing-home market largely frozen.
