New Home Sales Surge Despite Annual Price Drop and High Mortgage Rates

New home sales in the US jumped 12.2% in May to the highest level in over a year and a half despite the first annual decline in home prices in 11 years and elevated mortgage rates that are keeping some homeowners from selling.
While new home sales surged, existing home sales declined for the third straight month as limited inventory and high mortgage rates push buyers toward new construction.
The median price of a new home dropped 7.6% from a year ago to $416,300 in May, marking the first annual decline in home prices since 2012, though prices continued to rise month-to-month.
The Federal Reserve left interest rates unchanged in June but signaled at least two more rate hikes this year, keeping pressure on mortgage rates that are up over a full percentage point from a year ago.
Though new home sales rebounded, the broader housing market is showing signs of volatility as affordability challenges loom and economic uncertainty persists.