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Sales of new US homes rose unexpectedly in October, even as higher home prices and mortgage rate Potency has decreased rapidly, not seen in over a decade.

The Commerce Department reported Wednesday that new single-family home purchases grew 7.5% at a seasonally adjusted annual rate of 632,000 units. Economists polled by Refinitiv expected new home sales — which account for a small percentage of total sales — to fall 5.5% last month.

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On an annual basis, new home sales are still down 5.8%.

The median new home price climbed nearly 15.4% in October from the year-ago period to $493,000. That too is up more than 8% since September. There were nearly 470,000 new homes on the market at the end of October, the report suggests, a slight increase from the previous month.

impact on the middle class

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“In the big picture, the sharp increase in mortgage rates this year has had a notable impact on middle-class home buyers,” said Holden Lewis, a home and mortgage expert at NerdWallet. “Sales of new homes are skewing toward higher-income buyers. In October, 48% of new homes sold for $500,000 or more; that figure was 33% a year earlier.”

The interest rate sensitive housing market has borne the brunt of the Federal Reserve Aggressive campaign to tighten monetary policy and slow down the economy. Policymakers have raised the benchmark federal funds rate six times in a row — including four 75-basis-point hikes in June, July, September and November — and show no signs of stopping as they try to quell inflation that is now is also running close to 40-. high year A basis point is one hundredth of one percent.

average rate for a 30 year fixed mortgage Rates fell to 6.58% for the week ended Nov. 23 from 6.61% the previous week, according to the latest data released Thursday from mortgage lender Freddie Mac. This is significantly higher than a year ago when rates stood at 3.10%, although it is down from the peak of 7.08%.

Existing Home Sales

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Along with higher home prices, the rapid rise in borrowing costs has forced many early-stage home buyers out of the market.

A separate report released last week showed that existing home sales slowed for the ninth month in a row.

Sales of previously owned homes fell 5.9% from the previous month in October to an annual rate of 4.43 million units, according to data released by the National Association of Realtors (NAR) on Friday. That’s slightly better than what economists were expecting, according to Refinitiv.

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On an annual basis, home sales declined by 28.4% in October.

“More potential homebuyers were excluded from qualifying for mortgages in October,” Lawrence Yun, chief economist at NAR, said in a statement. “The impact is greater in the country’s costlier areas and markets, which have seen significant increases in house prices in recent years.”