New home sales rose 7.9 percent in August, following the 14.1 percent decline in July. Why the change? According to Rick Judson, chairman of the National Association of Home Builders, it is a sign that the higher interest rates didn't put a long term damper on home sales.
"Consumers are adjusting to the reality of today's higher rates following a period of record-setting lows, and today's sales report provides evidence of that," Judson says. "We expect to see more buyers coming back to the market as the psychological effects of the rate gains continue to wear off — particularly since, even after the recent spike, mortgage rates remain exceptionally favorable on a historic basis."
Pending sales are down, but that doesn't seem to be that unusual. Home sales spiked in the Spring with the historically low interest rates. That naturally slowed down as interest rates started to creep back up. Considering that the Spring showed sales at a six and a half year peak, news is still good in the housing industry. Moving forward, it is expected that existing home sales are going to decrease, but tight housing inventory in many markets will cause prices to rise.
My source:
New-Home Sales Up, Pending Sales Lag
