New home sales fell slightly in August despite mortgage rates continuing to fall, showing complications with the housing market.
The number fell 4.7% from July to 716,000, according to a Wednesday report from the Census Bureau. But the number of new home sales is 9.8% higher than it was in August 2023.
The median sales price for a new home was $420,600 in August.
As of Friday morning, the average rate on a 30-year, fixed-rate mortgage was at 6.18%, according to Mortgage News Daily, which tracks daily changes in rates. That is down from a peak last year of above 8% and is the lowest that mortgage rates have been since early 2023.
Meanwhile, existing home sales in July rose 1.3% to a seasonally adjusted annual rate of 3.95 million, the National Association of Realtors reported. However, the pace of existing home sales is down nearly 2.5% from the year before.
The housing market and housing affordability have been major issues for voters this election cycle given the years of hot inflation experienced under President Joe Biden. The Federal Reserve hiking interest rates in order to tamp down inflation only made buying a home even more challenging for voters as mortgage rates rose.
But last week, the Fed began cutting its interest rate target.
After a two-day meeting of its monetary policy committee in Washington, D.C., the Fed announced it would move its rate target to a range of 4.75% to 5.00%, down from 5.25% to 5.50%.
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The move to cut interest rates by half a percentage point surprised some investors who expected the Fed to opt for a normal cut of a quarter of a percentage point.
Lower interest rates cause mortgage rates to trend lower and, in turn, provide some relief for homebuyers who might have been holding out for mortgage rates to fall.