S
eptember's dip in mortgage rates may have given new construction a boost, but buyer enthusiasm could be waning as rates climb back up. Key points:

    New home sales surged 6.3% compared to last year, while existing home sales stalled out this fall.

    Mortgage rates are rising again, which could slow momentum across the board. The 30-year fixed-rate mortgage averaged 6.54% this week, marking its fourth consecutive increase.

    Sales of new homes reached a seasonally adjusted annual rate of 738,000 in September, up 4.1% from August and 6.3% compared to last year. Sales in the Midwest were particularly strong, rising 19.2% on a year-to-date basis.

    Existing home sales hit a 14-year low last month, while new home sales are recorded when a contract is put on a home, giving builders more buyer incentives and flexibility in financing options.

    Mortgage rates have continued to rise since the Federal Reserve's September rate cut, but still remain below their year-ago levels. Despite this, predictions suggest mortgage rates will decline before the end of the year.

    Buyer demand remains strong, with Redfin's latest demand index hitting its highest level since May and up 3% year-over-year. Inventory continues to rise, but is expected to slow as the holiday season approaches.