US New Home Sales Jump to Fastest Pace in Three Years
Sales of newly built homes in the United States surged last month, reaching their strongest level since early 2022, as homebuilders leaned on discounts and incentives to entice cautious buyers.
According to data from the US Census Bureau released Wednesday, new single-family home sales rose 20.5% in August, hitting an annualized rate of 800,000 units. The figure far exceeded economists’ expectations and marked the fastest pace in more than three years, signaling a burst of activity in an otherwise sluggish housing market.
Analysts credited the rebound to aggressive builder incentives, ranging from price cuts to mortgage rate buy-downs and help with closing costs. A recent survey from the National Association of Home Builders and Wells Fargo found that 39% of builders reduced prices in September—the highest share since the pandemic.
Falling borrowing costs also gave buyers some relief. Mortgage rates, which had been hovering near two-decade highs, eased last month as markets anticipated a Federal Reserve interest rate cut. The average 30-year fixed mortgage rate has since fallen further, dropping to 6.26% last week, according to Freddie Mac.
Still, economists cautioned against reading too much into the jump. “Take the gain with a huge grain of salt,” Wells Fargo analysts wrote, pointing to the volatility and frequent revisions in new home sales data. Oxford Economics’ Nancy Vanden Houten added that August’s surge “likely overstates any improvement in housing activity.”
While new construction accounts for about 14% of total home sales, the broader housing market remains constrained by affordability challenges. Mortgage rates remain roughly double the levels many homeowners locked in during the pandemic, keeping much of the market frozen.
“There is pent-up demand in housing, but affordability remains out of reach for many first-time buyers,” said Eric Teal, chief investment officer at Comerica Wealth Management.
For now, economists say, the August spike could signal early buyer response to easing rates—but the coming months will determine whether it marks a turning point or just another blip in a turbulent housing market.
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