US new home sales rose to the highest level in more than a year By Reuters

(Reuters) – Sales of new U.S. single-family homes rose to their highest level in more than a year in July as a drop in mortgage rates boosted demand, providing more evidence that the housing market is recovering.

New home sales rose 10.6 percent to a seasonally adjusted annual rate of 739,000 units last month, the highest level since May 2023, the Commerce Department’s Census Bureau said Friday. It was also the strongest sales increase since August 2022.

The sales pace for June was revised up to 668,000 units from the previously reported 617,000 units.

Economists polled by Reuters had forecast that new home sales, which account for more than 10 percent of U.S. home sales, would rise to a rate of 625,000 units.

New home sales are accounted for when a contract is signed. They, however, can be volatile from month to month. Sales rose 5.6% year-on-year in July.

The average rate on a 30-year fixed-rate mortgage was 6.46% this week, the lowest since May 2023 and more than half a percentage point lower than the same period last year, data from mortgage finance agency Freddie Mac showed.

It fell from a six-month high of 7.22% in early May amid signals from the Federal Reserve that it will deliver a long-awaited rate cut in September. This could help drive sales in the future.

Other housing data was mixed. US existing home sales rose more than expected in July, reversing a four-month decline. However, single-family housing starts fell to a 16-month low in July, likely weighed down by Hurricane Beryl, while permits for future construction also fell.