October's Higher Mortgage Rates Spook Homebuyers, Slowing New Home Sales

Higher mortgage rates in October led to a decrease in demand for newly built homes, with sales dropping 5.6% compared to September. The spike in mortgage rates during the late summer spooked budget-conscious buyers, resulting in a decline in sales activity. However, experts predict a recovery in new home sales by December as mortgage rates have started to retreat. Existing home sales also suffered a blow due to higher borrowing costs and a lack of inventory. While larger homebuilders have been offering below-market-rate home loans to offset rates, smaller builders have been less optimistic and have resorted to cutting home prices. Overall, new home demand remains sluggish for private builders.