New-home purchases dropped by 13.4 percent in July, the steepest decline in more than three years, and higher mortgage rates are probably to blame, Bloomberg reported on Aug. 23.
Citing Commerce Department figures, Bloomberg said the decline brought the annual sales total to 394,000, which was the smallest since last October. The biggest regional drop was in the West at 16.1 percent.
According to Bloomberg, builders nevertheless continue to be confident of pent-up demand from homebuyers. The supply of new homes rose slightly to 5.2 months in July from 4.3 months in June. The median price of a new home increased in July by more than 8 percent, to $257,200, when compared to 2012 figures. Sales of previously owned homes rose in July by more than 6.5 percent, to an annualized rate of 5.39 million.
The National Association of Home Builders (NAHB) also said that July’s drop was due to higher mortgage rates, but it called the drop a “temporary pause in buying activity.”
“The drop-off in sales in July is in part a reflection of buyers’ reaction to the recent uptick in mortgage rates as people reassess their budgets to determine how much house they can afford,” NAHB chairman Rick Judson said in a news release. “Consumers just need a little time to adjust to the new parameters of the market.”
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