New Home Sales Decline 0.4% as Interest Climbs

Sales of new homes fell 0.4% in August, dropping back slightly from a huge double-digit gain in July, the government reported today. Mortgage rates edged up at the same time.

The Commerce Department said that new single-family homes were sold at a seasonally adjusted annual rate of 755,000 units in August, following a 16.1% gain in July, the largest increase in nearly three years.

The July sales increase was the largest monthly advance since September, 1986, when sales climbed 22.9%.

Analysts had credited the July advance to a decline in fixed-rate mortgages which had fallen to 9.81% by the end of that month from a peak of 11.22% last March.

But rates edged back up to 10.22% by the end of August, according to a monthly survey by the Federal Home Loan Mortgage Corp., contributing to the decline in home sales that month.