Sales of newly built homes in the U.S. experienced a decline in August, signaling a dampened buyer demand due to elevated interest rates and home prices.
According to the Commerce Department’s report on Tuesday, new-home sales fell by 8.7% in August, reaching an annual rate of 675,000 compared to the revised figure of 739,000 in the prior month. These numbers are adjusted seasonally and represent the hypothetical scenario of the number of homes that would be built in a year if builders maintained the same pace each month.
Unfortunately, these figures fell short of expectations on Wall Street, with economists predicting new-home sales to reach a total of 695,000 in August.
The sharp decline in the Midwest region played a significant role in dragging down the overall rate of new-home sales.
It is important to note that the data from July has been significantly revised. July’s new-home sales reached a revised figure of 739,000, which is higher than the initial estimate of a 4.4% increase.
It is worth mentioning that data on new-home sales tend to be volatile on a monthly basis and are often subject to revisions.
Market Reaction
In response to this news, stocks such as DJIA SPX experienced a decline in early trading on Tuesday. Additionally, the yield on the 10-year Treasury note BX:TMUBMUSD10Y exceeded 4.5%.
Furthermore, shares of home builders, including D.R. Horton, Inc. DHI, -0.52%, Lennar Corp. LEN, -0.95%, PulteGroup Inc. PHM, -0.35%, and Toll Brothers Inc. TOL, -0.80%, all experienced losses during the morning trading session.