New home sales in the U.S. rose in August to a six-year high, indicating that the housing market is setting stronger.
However, the recovery is likely to be slow due to high unemployment rate and slow wage growth, which has affected demand, especially among first-time home buyers.
“This is welcome news in an otherwise mixed outlook,” Diane Swonk, a Chicago-based chief economist at Mesirow Financial, told Reuters. “We are still a long way from the housing market recovering from the bust.”
New home sales rose 18 percent to an annualized pace of 504,000 units, the second consecutive monthly expansion. This was the strongest level since May 2008, reported the Commerce Department.
While new home sales make up only 9 percent of the property sales, the growth in sales helped reduce concern that the market is slowing down after sales of existing homes fell in August.
Meanwhile, U.S. home mortgage applications dropped last week after interest rates surged, reported the Mortgage Bankers Association on Wednesday.
The MBA reported that its gauge of mortgage application activity, which incorporates both home purchase and refinancing demand, fell 4.1 percent in the week through Sept. 19.
The MBA’s gauge of refinancing requests dropped 7.0 percent as the index of loan demand for home purchases, a key signal of home sales, fell 0.3 percent.
Fixed 30-year mortgage costs stood at 4.39 percent on average last week, the most since May. This compares with 4.36 percent the previous week. The survey analyzes at least 75 percent of all U.S. retail residential mortgage requests, reported MBA. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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