Washington, DC, United States (4E) – Sales of newly constructed homes in the U.S. fell sharply in July to a nine-month low, adding to concerns that rising mortgage rates will slow the recovery in the housing sector.
Newly built home sales fell 13.4 percent to an annualized rate of 394,000, the slowest since October 2012, after a revised figure in the previous period that was lower than initially estimated, according to Commerce Department figures released Friday in Washington.
The number is below the median estimate of 487,000 offered by 74 economists in a survey by Bloomberg News. July’s decline was the biggest since May 2010.
Friday’s report also showed that June sales were revised down, from the initially reported 497,000 to 455,000.
Constraints in availability of materials and land are prompting builders to hold back construction in an attempt to increase revenue and prices. At the same time, home builder confidence is on the rise as improved employment and pent-up demand will probably help sustain the industry rebound.
The decline in new-home sales came at a time when rising mortgage rates are boosting the cost of purchasing a home, discouraging potential buyers.
Despite the sharp decline, new-home sales are still up from the previous year, a sign of a sustained housing recovery. July sales were 6.8 percent higher from the previous year.