Purchases of new U.S. homes rose in August, capping the weakest two months this year, showing the fallout from mortgage rates at a two-year high is cooling the real-estate rebound.
Sales increased 7.9% to a 421,000 annualized pace following a 390,000 rate in the prior month that was less than previously estimated, figures from the Commerce Department showed today in Washington. Demand slumped 14.1% in July. The median forecast of 77 economists surveyed by Bloomberg News called for 420,000.
The data highlight the risk that the run-up in borrowing costs pose for the housing rebound, which has boosted growth the past two years. Federal Reserve policy makers last week refrained from reducing the $85 billion pace of monthly bond buying, saying the tightening of financial conditions, if sustained, could slow the pace of improvement in the economy.
“Any recovery will have some bumps along the way, and the rise in mortgage rates is one of those bumps,” Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “Higher rates are dampening demand but the evidence isn’t overwhelming. The sector should continue to expand.”
The back-to-back readings were the weakest this year, and fell short of an average 446,000 rate in the first six months of 2013.
Economists’ sales estimates ranged from 385,000 to 450,000. The data for July was previously reported as 394,000.
Another report today showed orders for equipment such as computers and machinery climbed less than forecast in August, indicating a strengthening in business spending will take time to develop.
Bookings for non-military capital goods excluding aircraft increased 1.5% after a 3.3% drop in July, the Commerce Department reported. The median forecast of economists surveyed by Bloomberg projected a 2% gain. Demand for all durable goods, those meant to last at least three years, rose 0.1% after plunging 8.1% in July.
The median sales price for a new home increased 0.6% from August 2012, to reach $254,600, today’s report showed.
Purchases rose in three of four U.S. regions, led by a 19.6% jump in the Midwest. Sales dropped 14.6% in the West to an 82,000 annualized pace, the weakest since March 2012.
The supply of homes at the current sales rate fell to 5 months from 5.2 months in the prior month. There were 175,000 new houses on the market at the end of August, the most since March 2011.