New US home sales drop 10.5% in July on high mortgage rates

New US home sales experienced a sharp decline of 10.5% in July, according to data released by the Commerce Department's Census Bureau. The seasonally adjusted annualized sales rate for single-family homes dropped to 607,000 units, marking the lowest pace since January and a decrease from the revised June figure. Economists had anticipated a higher sales rate of 620,000 units for the month.

The decline in new home sales, which are recorded when a contract is finalized, is primarily attributed to high mortgage rates. Sales decreased by 6.3% compared to the same period in the previous year. Furthermore, the median price for a new house fell to $393,800 in July, the lowest level in four years, representing a 0.9% decline from the prior year.

Consumer confidence, as indicated by a separate report from the Conference Board, has also been affected by the housing market. The report revealed that only 5.2% of American consumers plan to purchase a home within the next six months, a significant decline from 6.5% in July. This marks the largest decrease in over five years. Additionally, consumer confidence fell to a seven-month low, with concerns about the job market and inflation cited as key factors.