Sales of new homes in the United States dropped significantly in the month of July, an indication that higher mortgage rates may be slowing the recovery of the housing market.
The U.S. Department of Commerce announced that sales of newly built homes in the U.S. dropped 13.4 percent in July to a seasonally adjusted annual rate of 394,000. That's the lowest pace in nine months, and down from a rate of 455,000 in June.
While new home sales have risen 7 percent over the last 12 months, the annual pace remains well below the 700,000 that is consistent with a healthy housing market.
The housing market has been one of the strongest performers this year in an otherwise sluggish economy, helped by steady job gains and low mortgage rates.
This being said, mortgage rates have risen a full percentage point since May, and have started to steal some of the market's momentum.