WASHINGTON -- Sales of new U.S. homes rebounded in August, posting the fastest growth since January, according to government data released Wednesday.
Sales of new U.S. homes rose 7.9 percent -- the fastest growth since the beginning of the year -- to a seasonally adjusted annual rate of 421,000 in August, with rising results in three of four regions, according to the U.S. Department of Commerce.
Economists polled by MarketWatch had expected sales to climb in August to a rate of 420,000, compared with an original July estimate that pegged the rate at 394,000. On Wednesday, the government revised July's rate to 390,000.
The new-home-sales series is volatile, and monthly results can be difficult to interpret. In August, the confidence interval for new-home sales was plus or minus 14.6 percent, meaning that government analysts think that sales growth likely fell somewhere within a range of negative-6.7 percent to 22.5 percent.
Though there are signs that rising mortgage rates are slowing the housing market -- the average rate for the popular 30-year fixed-rate mortgage has climbed more than 1 percentage point since early May -- Wednesday's data point to a housing market that continues to gather steam. New-home sales in August were up 12.6 percent from the year-earlier period. Pent-up demand and mortgage rates that still are relatively low have been supporting sales.
While rising rates hurt some borrowers' ability to buy homes, there's evidence that others buyers are rushing to close deals soon before affordability declines further.
"The extent to which a rise in mortgage rates has affected momentum is still unclear," said Jim O'Sullivan,
chief U.S. economist at High Frequency Economics.
Indeed, home builders are reporting rising quarterly earnings and are the most confident in almost eight years. And economists expect the housing market to continue to add to economic growth this year. There's certainly room to grow: New-home sales remain far below a peak rate of almost 1.4 million in 2005.
Still, officials are acting with caution to avoid damaging the housing market's recovery. Last week, the Federal Reserve surprised markets by announcing that it is not yet cutting its massive asset purchase program that has helped keep long-term rates low.
But buyers and the housing market face other challenges, too. For one, credit standards are high, and there's concern that some credit-worthy borrowers can't obtain loans. Also, intense competition in certain markets and rising prices make it tough for first-time owners to participate in the market.
Further, stronger employment growth is needed so that more people can afford to start new households.
Details of the new-home-sales report show the median price was $254,600 last month, up 0.6 percent from the year-earlier period, but down 0.7 percent from July. The supply of new homes on the U.S. market fell to 5 months at the current sales pace from 5.2 months in July.
By region, monthly sales rose 19.6 percent in the Midwest, 15.3 percent in the South and 8.8 percent in the Northeast. But sales fell 14.6 percent in the West.