By Sharon Nunn and Sarah Chaney 
 

WASHINGTON--Sales of new homes in the U.S. rebounded in August, following two months of declines.

Purchases of newly built single-family homes-a relatively narrow slice of all U.S. home sales-rose 3.5% to a seasonally adjusted annual rate of 629,000 in August, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a smaller 0.5% gain.

The South was the only region in the U.S. to see new-home sales declines in August.

In the longer term, sales grew 12.7% in August from the prior year. Still, the pace of new-home sales remains well below the elevated levels seen before the 2007-09 financial crisis and recession.

More widely, housing-market inventory has been tight, driving up home prices and pricing some potential buyers out of the market. At the same time, skilled construction labor shortages, rising input costs and rising mortgage rates are also making the overall cost of buying a home more expensive. Sales of previously owned homes stalled in August, highlighting a growing disconnect between the sluggish housing market and robust economic growth.

Meanwhile, a gauge of U.S. home-builder confidence plateaued in September after declining for much of 2018.

"Demand is there, but builders continue to struggle to find zoned land for building, labor and reasonably priced materials for construction," said Robert Frick, economist at Navy Federal Credit Union.

Write to Sharon Nunn at sharon.nunn@wsj.com and Sarah Chaney at sarah.chaney@wsj.com.

(END) Dow Jones Newswires

September 26, 2018 10:15 ET (14:15 GMT)

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