After seemingly cutting back in July, home owners in the U.S. stepped it up in August with home buying.
Sales of new homes increased 7.9 percent last month after decreasing 14.1 percent in July. The rebound in sales suggests that higher mortgage rates are not yet slowing the housing recovery. This news comes alongside the also recent news that August saw the highest number of home sales since February 2007.
Moreover, with home sales reaching new highs, homebuilders remain more confident in the market than they’ve been in eight years. (!) Still, some buyers may be racing to close deals before rates rise further. The average rate on the 30-year fixed mortgage has risen more than a full percentage point since May.
New-homes sales were 12.6 percent higher in August than a year ago.
The market saw increased sales in all regions but one in August, increasing 19.6 percent in the Midwest, 15.3 percent in the South and 8.8 percent in the Northeast. Sales plunged 14.6 percent in the West, the second straight month of double-digit declines.
The National Association of Realtors cautioned that the August pace may be a snapshot of a temporary peak due to buyers rushing to lock in mortgage rates in July/July before they increased further. Buyer traffic dropped off noticeably in August, likely reflecting the higher rates. However, economists still say that the housing recovery should withstand the recent rate increase as mortgage rates are still low by historical standards. The average rate on a 30-year fixed mortgage was 4.5 percent last week.