Key facts
- New U.S. single-family home sales increased by 1.6% in June to 628,000 units.
- This sales pace exceeded economists' expectations of 610,000 units.
- The median new house price in June was $398,300, a 2.7% decrease from the previous year.
- The average 30-year fixed-rate mortgage rate reached 6.58%.
Sales of new single-family homes in the United States increased in June, reversing a two-month decline and surpassing market expectations. The Commerce Department's Census Bureau reported a 1.6% rise to a seasonally adjusted annualized rate of 628,000 units, exceeding the 610,000 units forecast by Reuters-polled economists.
Despite the uptick, the housing market continues to face headwinds from elevated mortgage rates and prices. The median new house price in June stood at $398,300, marking a 2.7% decrease compared to the previous year. However, borrowing costs remain a significant deterrent for potential buyers.
The average interest rate on a 30-year fixed-rate mortgage, a popular home loan type, has reached its highest level since August of the previous year. Freddie Mac reported the national average rate at 6.58% this week, while the Mortgage Bankers Association noted a contract rate of 6.69% for the week ended July 17. These figures represent the highest rates seen in 11 months.
Mortgage rates have climbed approximately 0.60 percentage points since late February, influenced by rising global oil prices and broader inflation concerns. Bond markets are anticipating potential interest rate hikes from the Federal Reserve, with futures markets indicating a high probability of a hike in September. Consequently, yields on 10-year Treasury notes, a benchmark for mortgage pricing, have risen by a quarter of a percentage point this month, nearing 18-month highs.