WASHINGTON (8/26/13)--Sales of new U.S. homes declined steeply in July--to the lowest level in nine months--accentuating concerns that rising mortgage rates are slowing down the housing market recovery (The Wall Street Journal and Bloomberg.com Aug. 23).
Sales decreased 13.4% in July--to an annual rate of 394,000--from June, the Commerce Department said Friday. That constituted the sharpest drop in three years, placing sales at their lowest level since October.
Last week, the average rate on a 30-year mortgage climbed to 4.58%--up from 4.4% a week prior and more than a point higher than the level in May, said the Journal.
In attempts to bolster prices and revenue, builders are curbing construction amid limitations on available land and materials, Bloomberg said.
However, builders' confidence is surging because pent-up demand and the increasing availability of jobs likely will maintain housing gains, with homebuyers hurrying to capitalize on historically low mortgage interest rates before they further escalate, Bloomberg added.
High builder confidence in the face of low sales volumes in the housing market is reason for optimism moving forward, Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York, told Bloomberg.