Purchases of new single-family homes fell 12.7 percent compared with the previous month to a seasonally adjusted annual rate of 511,000, the Commerce Department said Tuesday.
Compared with a year ago, sales are down 29.6 percent.
Economists had forecast a new home sales rate of 575,000. The prior month’s estimate was revised down to 585,000 from 590,000.
The Federal Reserve has been hiking its interest rate target in an effort to tame inflation. The overnight borrowing rate for banks has risen from a range of between zero to 0.25 percent to a range of 2.25 to 2.50 percent since March. Mortgage rates have jumped higher, rising from around three percent at the start of the year to nearly six percent in July. This has hurt home affordability and driven down demand for houses.
