US New Home Sales Plummet Amid High Mortgage Rates and Inflation

New US single-family home sales plummeted in July as high mortgage rates and prices continued to weigh on the market, pushing potential buyers aside.

The Commerce Department's Census Bureau reported a seasonally adjusted annualized rate of 607,000 units, down 10.5% from June's revised pace and a year-over-year drop of 6.3%. Economists polled by Reuters had estimated sales at 620,000 units.

The median new house price in July was $393,800, 0.9% lower than the previous year. Steep borrowing costs are hindering housing, with the average interest rate on a 30-year fixed-rate mortgage holding at 6.77%, just shy of its recent high of 6.81%. Mortgage rates have increased by around 0.60 percentage points since the US and Israel launched attacks against Iran in late February.

The Federal Reserve has maintained steady interest rates since last December, but three policymakers dissented against that decision at the last meeting, preferring a rate hike to combat inflation that has exceeded the Fed's 2% target for over five years.