New home sales rebound – will the trend continue?

After dismal figures in July, sales of newly built single-family homes bounced back in August. However, some experts believe it’s going to be an uphill climb from here as rates continue to move higher.

The Census Bureau reported a 28.8% spike in new home sales, up to a 685,000 seasonally adjusted annual rate from an upwardly revised reading in July. Despite the August boost, new home sales were still down by 14% on a year-to-date basis.

“The sales gain in August reflects that there is clearly sidelined demand for housing, but it is being constrained by rising interest rates that are pricing many potential consumers out of the market, particularly entry-level buyers,” explained Robert Dietz, chief economist of the National Association of Home Builders. “After a brief lull when mortgage rates fell below 5.3% for much of August, they have since jumped much higher in September and are now approaching 7%.”