Data released by the U.S. Department of Commerce on Wednesday showed that after a significant increase in July, new home sales in the United States fell back in August, highlighting that buyers remain patient despite the steady decline in mortgage interest rates. The annualized new home sales in the U.S. for August were 716,000 units, with expectations for 700,000 units, and the previous July figure was 739,000 units on an annualized basis. The new home sales in August decreased by 4.7% month-on-month, with expectations for a 5.3% drop, while the previous July figure saw a 10.6% month-on-month increase. The new home sales in July had reached the highest in over a year, with data significantly exceeding expectations.

The median price of homes sold decreased by 4.6% compared to the same period last year, to $420,600. This marks the seventh consecutive month of year-over-year declines in new home prices, continuing the longest downward trend since 2009. This mainly reflects a decrease in the sales volume of homes priced above $500,000.

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In August, builders made significant progress in selling existing inventory, with the number of completed homes sold reaching the second-highest level since the end of 2006. However, the inventory remains ample, with 467,000 homes available for sale, close to the highest level since the Great Recession of 2008.

Among the four regions of the United States, sales declined in three, with the Northeast and West regions being particularly noticeable. The contract signings in the largest Southern region of the U.S. increased to an annualized 459,000, reaching the highest since the end of 2021.

New home sales account for about 10% of U.S. home sales and are counted at the time of contract signing. Compared to existing home sales, they are a leading indicator of the trend in the U.S. real estate market. However, it should be noted that new home sales data fluctuate significantly on a monthly basis.

Last week, it was announced that existing home sales, which account for 90% of U.S. real estate sales, were also sluggish in August, reaching a new low since October last year. At the same time, house prices reached new highs, and inventory continued to rise.

Despite the decline in home sales, the sentiment in the U.S. real estate market is warming up, driven by the decline in interest rates. The latest survey shows that the morale of consumers and homebuilders has turned optimistic. A survey by the Conference Board shows that the proportion of consumers planning to buy a home in the next six months in September rose to the highest level in a year.

Driven by expectations of a series of interest rate cuts by the Federal Reserve, mortgage interest rates are at their lowest level in two years. On the same day, data from the Mortgage Bankers Association (MBA) showed that as of the week ending September 20, the contract interest rate for 30-year fixed-rate mortgages fell by 2 basis points to 6.13%, marking the eighth consecutive week of decline and the longest falling cycle since 2018-2019.

After a significant decline in the previous two weeks, the average contract interest rates for 15-year mortgages and 5-year adjustable-rate mortgages saw a slight increase last week.However, it should be noted that U.S. housing financing costs may begin to stabilize. Last week, as traders debated the extent of the Federal Reserve's interest rate cut in November and the path of rate cuts, the yield on the 10-year U.S. Treasury bond edged higher.

The MBA data also showed that, along with the decline in mortgage rates, as of the week ending September 20:

The MBA refinancing index surged by 20.3%, reaching the highest level since April 2022.

The MBA purchase application index rose by 1.4% last week, reaching the highest level since early February. The index has risen for five consecutive weeks, indicating that demand in the U.S. real estate market is developing and gradually gaining a foothold.

The MBA survey has been conducted weekly since 1990, using responses from mortgage bankers, commercial banks, and savings institutions. The data covers more than 75% of retail residential mortgage loan applications in the United States.