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ew home sales declined in August as potential buyers waited for mortgage rates to drop further. According to the Census Bureau, new home sales fell 4.7% to a seasonally adjusted rate of 716,000 units, down from July's revised rate of 751,000. Despite this monthly decline, annual sales rose 9.8% from last August and exceeded expectations.

    Elevated mortgage rates, record home prices, and inventory shortages continue to deter buyers. However, with the Federal Reserve's interest rate cuts, mortgage rates have decreased since May, reaching 6.09% for a 30-year fixed mortgage last week. The Fed has projected additional rate cuts this year and in 2025.

    To attract buyers facing affordability challenges, many builders are offering incentives such as "rate buydowns." Lennar reported that these measures have helped maintain demand despite high interest rates. Meanwhile, applications to purchase a home rose 1% last week, according to the Mortgage Bankers Association. Housing starts also bounced back in August, with new residential construction rising 9.6% to a 1.36 million annualized rate, the fastest pace since April.