New US Home Sales fall as high borrowing costs stifle housing demand

• Sales of new U.S. single-family homes fell in July following a sharp upward revision to the prior month's sales pace, and the overall trend remained consistent with a housing market struggling in an environment of high mortgage rates.
• The report from the Commerce Department on Monday bolstered economists' expectations that the housing market slump could persist through the end of the year. Though mortgage rates have eased on expectations that the Federal Reserve would resume cutting interest rates in September, they continue to outpace wage growth, pushing home ownership beyond the reach of many.
• New home sales dropped 0.6% to a seasonally adjusted annualised rate of 652,000 units last month, the Commerce Department's Census Bureau said. The sales pace for June was upgraded to a rate of 656,000 units from the previously reported pace of 627,000 units.
• Economists polled by Reuters had forecast new home sales, which make up about 14% of U.S. home sales, would rise to a rate of 630,000 units. Sales declined 6.6% in the Midwest and dropped 3.5% in the densely populated South. They were unchanged in the Northeast and increased 11.7% in the West.
• New home sales, which are counted at the signing of a contract, are volatile on a month-to-month basis and subject to big revisions. They dropped 8.2% on a year-over-year basis in July. Government data last week showed single-family homebuilding rebounded in July, though permits for future construction rose marginally.
• Economists expect that residential investment, which includes homebuilding and home sales through broker commissions, to contract for a third straight quarter in Q3 2025.

(Source: Reuters)