FILE – In this July 9, 2013, file photo, a construction worker drills on the roof of a new home in New Paltz, N.Y. The Commerce Department reports on new-home sales for July, on Friday, Aug. 23, 2013. (AP Photo/Mike Groll, File)
WASHINGTON (AP) — Americans cut back sharply in July on their purchases of new homes, a sign that higher mortgage rates may slow the housing recovery.
U.S. sales of newly built homes dropped 13.4 percent to a seasonally adjusted annual rate of 394,000, the Commerce Department said Friday. That’s the lowest in nine months. And sales fell from a rate of 455,000 in June, which was revised down from a previously reported 497,000.
The housing rebound that began last year has helped drive economic growth and create more construction jobs. But mortgage rates have climbed a full percentage point since May. The increase has begun to steal some momentum from the market.
Sales of new homes are still up 7 percent in the 12 months ending in July. Yet the annual pace remains well below the 700,000 that is consistent with a healthy market.
July’s drop “may mark an uh-oh kind of moment for the housing recovery,” said Mark Login to read more