WASHINGTON, D.C.: Price cuts and incentives helped lift sales of newly built U.S. homes to their highest level in eight months in August, although elevated mortgage rates and a large inventory of unsold properties continued to weigh on the housing market.

New single-family home sales rose 6.4 percent to a seasonally adjusted annual rate of 684,000 units, the highest since December 2025, the Commerce Department's Census Bureau said Thursday.

The July figure was revised upward to 643,000 units from the previously reported 607,000. Economists polled by Reuters had expected August sales to reach 615,000 units.

Sales varied sharply across regions. They surged 84.9 percent in the Midwest and increased 6.9 percent in the South, while falling 36.1 percent in the Northeast and 15.2 percent in the West. Nationwide, sales were down 2 percent from a year earlier.

New home sales are recorded when a contract is signed, making them a timely measure of housing demand, although they represent a small share of total U.S. home sales.

Builders have been reducing prices and offering incentives to attract buyers as mortgage borrowing costs rise. The average rate on a 30-year fixed-rate mortgage has increased by nearly 100 basis points since the U.S.-Israeli war with Iran began at the end of February.

The conflict has pushed up energy prices, longer-term Treasury yields and mortgage rates. The average 30-year mortgage rate reached 6.95 percent last week, its highest since January 2025, according to mortgage finance firm Freddie Mac.

A National Association of Home Builders survey released last week showed that builders' expectations for sales over the next six months deteriorated considerably in September.

The median price of a new home fell 5.8 percent from a year earlier to US$393,700 in August, Census Bureau data showed. Most homes sold during the month were priced below $499,999.

Despite the price reductions, builders continued to face a large supply of unsold homes, which could constrain their ability to begin new construction projects. More than half of the 483,000 new homes available for sale were still under construction.

At August's sales pace, it would take 8.5 months to clear the inventory, compared with 9.0 months in July. The supply of new homes on the market was unchanged from the previous month.

The market also continues to face a shortage of previously owned homes, particularly starter homes.