Sales of New U.S. Homes Rose in August Following July Plunge

[Purveyor]

Purchases of new U.S. homes rose in August, capping the weakest two months this year, showing the fallout from mortgage rates at a two-year high is cooling the real-estate rebound.

Sales increased 7.9 percent to a 421,000 annualized pace following a 390,000 rate in the prior month that was less than previously estimated, figures from the Commerce Department showed today in Washington. Demand (DGNOCHNG) slumped 14.1 percent in July. The median forecast of 77 economists surveyed by Bloomberg News called for 420,000.

The data highlight the risk that the run-up in borrowing costs pose for the housing rebound, which has boosted growth the past two years. Federal Reserve policy makers last week refrained from reducing the $85 billion pace of monthly bond buying, saying the tightening of financial conditions, if sustained, could slow the pace of improvement in the economy.

“The jump in mortgage costs is a significant factor in home purchase decisions, so the housing recovery will abate to some degree,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. At the same time, “inventories are still tight. There is still room on the supply side for builders to continue building more homes.”

more...

http://www.bloomberg.com/news/2013-09-25/sales-of-new-u-s-homes-rose-in-august-following-july-plunge.html

[geek tragedy]

1. Makes perfect sense--the writing was on the wall that rates wouldn't

stay that low forever, so people jumped. Any time a lot of people jump in at an accelerated pace, that means fewer to jump in later.

Bigger story is that the market appears to be behaving in semi-rational and predictable manner.