Single-family new-home sales across the country took an unexpected turn in July, dropping to its lowest level in nine months, the Commerce Department reported.
Sales fell 13.4 percent to an annual rate of 394,000 units.
Economists blame the recent surge in mortgage rates.
“The drop-off in sales in July is in part a reflection of buyers’ reaction to the recent uptick in mortgage rates as people reassess their budgets to determine how much house they can afford,” said Rick Judson, chairman of the National Association of Home Builders. “Consumers just need a little time to adjust to the new parameters of the market.”
The Fed has said it would soon taper its bond-buying program, a stimulus program that has kept interest rates near or at record lows. Since May, as fears mount the program will soon end, mortgage rates have been on the rise.
The national median price for a new-home sale rose to $257,200 – a rise from $237,400 a year ago.
Builders have ramped up construction on new homes the past year, with inventories increasing 4.3 percent from June to July.