By Michael Sasso | Bloomberg New-home sales in the US bounced back to the highest level since May 2023 as buyers took advantage of lower mortgage rates and more listings to choose from. Contract signings on new single-family homes increased 10.6% last month to a 739,000 annual rate, reflecting gains in all four major regions, government data Friday showed.
The pace beat all estimates in a Bloomberg survey of economists. The pickup in sales suggests the combination of lower mortgage rates and generous sales incentives by builders is starting to take root. Prospective buyers are finding more options in the new-home market as the supply of existing homes is still very constrained.
Asking prices are also more competitive compared to the resale market. Mortgage rates have dipped to 6.5% from a 2024 peak of nearly 7.
3% in April, and they’re expected to fall further as the Federal Reserve gets ready to begin lowering interest rates next month. Chair Jerome Powell said at the central bank’s annual symposium in Jackson Hole, Wyoming, on Friday that “the time has come” to cut rates. The pickup in sales allowed builders to make a dent in inventory last month, which fell to the lowest level since the start of the year.
Nonetheless, the 462,000 homes for sale is still near the highest since 2008. At the current sales rate, that represents 7.5 months of supply, the lowest since September but above pre-pandemic levels.
Elevated inventory is helping to keep a lid on prices: the media.