New-home sales surged in June as would-be buyers appeared to shrug off higher interest rates, maintaining momentum for a key sector New-home sales increased 8.3% last month to a seasonally adjusted annual rate of 497,000, the Commerce Department said Wednesday. That was the highest level since May 2008. Sales were up 38.1% from a year earlier. Economists had expected homes would sell at a 485,000 monthly pace.
The sales jump comes amid a sharp increase in mortgage rates. The rates for a 30-year fixed loan began rising in late May are now up about a full percentage point to an average 4.58%, according to Mortgage Bankers Association data also released Wednesday. That's down from 4.68% a week earlier.
Mortgage rates affect new-home sales quicker than sales of previously owned homes because the new-home figures are measured when a buyer signs a contract to purchase a new home. Existing-home sales figures reflect closings 30 to 60 days later, on average, after a contract is signed.
Some builder analysts have said the impact of mortgage rates on June home sales could be muted because builders will sometimes provide a break on interest rates to buyers in order to reduce the level of cancellations.
Other analysts see signs that home buyers are tentatively working through the higher rates. "The strong rise in new-home sales in June means that the housing market has come through its first major test of higher mortgage rates unscathed," said Paul Diggle, property economist at Capital Economics.
Rising rates could encourage some potential buyers to move quickly before prices increase further, and economists say many prospective homeowners would find higher rates to be affordable despite higher payments.
The strong sales pace in June caused inventory to tighten, pushing up home prices. The stock of new homes for sale at the end of June was 161,000. That would take 3.9 months to deplete at the current sales pace, the quickest since January.
Meanwhile, the median price for a new home sold in June was $249,700, up 7.4% from that time last year.