New Home Sales Surge in August Despite Higher Prices, Mortgage Rates

New single-family home sales rebounded in August as buyers shrugged off higher prices and mortgage rates.

The median sales price of new houses sold last month rose 0.4 percent to $393,700, Census Bureau data released on Sept. 24 show.

While this is up from the $392,200 recorded in July, it is firmly below the August 2025 price of almost $418,000.

Despite the modest jump, late-summer demand was robust.

New home sales surged 6.4 percent to a seasonally adjusted annualized rate of 684,000, a sharp reversal from the revised 4.3 percent decline in July. This also represented the largest increase since February.

A new home sale is counted when a sales contract is signed, or a deposit is approved.

Homebuyers appeared to have dismissed the surge in borrowing costs.

Mortgage rates have been on an upward trajectory since early March, mirroring the steady increase in short- and long-dated Treasury bond yields.

Mortgage rates generally track U.S. government bonds, particularly the benchmark 10-year Treasury yield, which is now at its highest level since July 2007.

As of Sept. 24, the average rate for a 30-year fixed mortgage is at a more than two-year high of 7.37 percent, according to Mortgage News Daily.

Current interest rates could be the norm for now, says Byron Anderson, head of fixed income at Laffer Tengler Investments.

“We are firmly setup for higher yields in this environment,” Anderson said in an emailed note to The Epoch Times. “Rate hikes do not solve Iran, oil, AI boom, or inflation. They do increase borrowing costs for everyone else in the market, which will eventually hit labor and the consumer if the Fed gets aggressive with hikes.”

Adapting to the Climate

Until relief arrives, industry experts say builders are using a wide array of strategies to support stronger market activity.

A Sept. 15 Realtor.com report found that about 15 percent of new-construction listings advertised an average rate of below 4 percent, far lower than today’s rates.

Additionally, recent data suggest that homebuilders have steadily lowered prices on new residential properties since the pandemic peak.

Lennar, the second-largest homebuilder in the United States, has cut prices by as much as 30 percent since the crisis-era high in 2022.

“Builders continue to use incentives and pricing adjustments to support buyers as limited existing-home inventory helps sustain the new-home market,” Bill Owens, chairman of the National Association of Home Builders, said in a statement.

Meanwhile, a sizable share of housing activity occurred in the South, while demand weakened in the Northeast and West.

This should be good news for the southern economies, says Jeffrey Roach, chief economist for LPL Financial.

“The second-order effects of rising housing activity should provide support for retail spending and related consumer activity across the region,” Roach told The Epoch Times in an emailed note.

Housing inventory continues to be tepid, Census Bureau data show.

The number of new houses for sale at the end of August was 483,000, unchanged from the previous month and below the August 2025 estimate of 493,000. This indicates a supply of 8.5 months at the current sales rate, little changed from a year ago.

As for the broader housing market, elevated mortgage rates and the ongoing lock-in effect will likely mean the real estate sector will not contribute much to overall economic growth, Roach said.

In 2020 and 2021, the Federal Reserve’s emergency interest rate cuts pushed mortgage rates to record lows. Buyers snapped up homes with 3 percent mortgages, and owners refinanced at lower rates. Today, amid significantly higher prices and borrowing costs, many homeowners who are benefiting from those low rates hesitate to move, leaving the existing‑home market largely frozen.