After a lull, new-home sales up 3.5 per cent in August

WASHINGTON — Sales of new U.S. homes climbed 3.5 per cent in August, snapping a two-month decline as buying surged in the pricey Northeast and West housing markets.

The Commerce Department said Wednesday that newly built homes sold at a seasonally adjusted annual rate of 629,000 last month. The pace of sales were revised downward for July and June. Sales of new homes have advanced 6.9 per cent this year. Still, rising costs and higher mortgage rates have tempered some of the enthusiasm from would-be buyers.

“Demand has cooled as home prices reached levels that have caused some prospective buyers to balk, while homebuilders seem to be finally making a little headway in supplying the market adequately,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

For the past several years, home prices have consistently increased at a significantly faster clip than incomes. Historically low mortgage rates had helped to ease the mounting costs of purchasing a home, but mortgage rates have been on the rise for the past year.