Washington — Sales of new single-family homes climbed sharply in July, reaching a seasonally adjusted annual rate of 745,000 units, according to Commerce Department data released Thursday. Economists surveyed by Reuters had expected 732,000 sales, making the print a clear beat and the strongest since May 2024.

The advance marked a 13.4% increase from June’s downwardly revised 656,000 pace. That month’s figure had initially been pegged lower before today’s adjustment. Inventory levels held steady at 465,000 homes, enough for 7.5 months of supply at the current sales pace, the report states.

Housing analysts pointed to falling mortgage rates and steady job growth as key drivers. The 30-year fixed mortgage rate dipped below 6.8% in late July, down from peaks above 7% earlier in the year, according to Freddie Mac. "Buyers are responding to easier financing conditions," said Nancy Lazar, chief economist at Piper Sandler. She noted the uptick aligns with broader consumer confidence gains reported this week.

Month-over-month, sales in the South led the gains with a 20% rise to 372,000 units. The West saw a 5% increase to 154,000, while the Northeast and Midwest posted smaller advances. Median sales prices eased slightly to $402,600 from $407,200 in June, signaling some relief on affordability pressures.

The data carries weight in financial markets. New home sales often foreshadow trends in the larger existing-home market, with the two reports showing tight correlation over time. A stronger-than-expected reading typically bolsters the US dollar, as it signals economic resilience. The dollar index rose 0.3% immediately after the release, trading near 104.20.

Federal Reserve officials track housing closely for clues on inflation and spending. Chair Jerome Powell highlighted the sector’s role in his Jackson Hole speech last month, noting persistent supply constraints. Today’s figures suggest builders are ramping up, with single-family housing starts up 5.8% year-over-year in July Census data.

Still, challenges linger. High home prices and insurance costs deter some buyers, particularly in hurricane-prone regions. The National Association of Home Builders’ sentiment index ticked up to 44 in August from 42, but remains below the 50 breakeven mark. "Affordability is the wildcard," said NAHB chief economist Robert Dietz.

Investors welcomed the report. Shares of homebuilders like D.R. Horton rose 1.2%, while Lennar gained 0.9% in early trading. The broader S&P 500 housing index climbed 0.8%. Bond yields ticked higher, with the 10-year Treasury note yield touching 3.92%.

Looking ahead, August new home sales data lands October 30. Forecasts call for a slight pullback to 728,000 amid potential rate volatility. Policymakers and markets will parse the trend for signs of sustained momentum in the $2 trillion housing economy.