New home sales fall as mortgage rates weigh down housing market

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February new home sales fell as the housing market continues to feel the effects of higher mortgage rates, which have remained at multiyear highs for months.

. Nevertheless, the number of new home sales is nearly 6% higher than it was in February of last year, in part because the inventory of pre-owned homes is so low that buyers have been forced into the market for new stock.

Prices for new home sales have generally fallen since peaking at nearly $497,000 in October 2022. Yet new home prices are just under 30% higher than their trough at the start of the pandemic. During the pandemic, the Federal Reserve shaved its interest rate target to near-zero, and mortgage rates plunged to super-low levels. At one point in early 2021, people were locking in incredible 2.5% mortgages — the lowest level in post-war modern history.

 

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