New home sales plummeted 11 percent in September amid sky-high mortgage rates

New home sales fell rapidly in September amid sky-high mortgage rates that are pushing buyers out of the once-hot housing market.

Sales of new single-family homes in September fell by 10.9 percent to a seasonally adjusted annual rate of 603,000 units, according to data released by the Census Bureau on Wednesday.

The median sales price of new houses sold last month was $470,600, while the average sales price was $517,700.

The housing market has cooled significantly in recent weeks as the Federal Reserve’s ongoing fight with persistent inflation led to a series of baseline interest rate hikes over the summer.

Trickle-down effects of these rate increases have significantly affected the housing market, leading to a sharp rise in monthly payments that pushed more buyers out of the market.

As a result, new home prices are falling and listings are sitting on the market longer.

U.S. home prices saw a record slowdown in August, falling by 2.6 percent amid the Fed’s aggressive interest rate hikes, which made it more costly to afford a mortgage.

The S&P CoreLogic Case-Shiller Index released Tuesday shows a 13 percent annual gain in August for home prices, but a sharp monthly drop.

Mortgage rates rose last week for the 10th consecutive week, reaching their highest level since 2001, 7.12 percent, according to data from the Mortgage Bankers Association.

The U.S. central bank is on track to raise the federal funds rate again at its next meeting in November after data from the Labor Department showed that inflation has hovered at around 8 percent.

Overall home sales fell for the eighth consecutive month in September, according to separate data released last week by the National Association of Realtors (NAR). Existing home sales declined by 1.5 percent from August to a seasonally adjusted annual rate of 4.71 million units, while year-over-year sales dropped by 23.8 percent.

NAR chief economist Lawrence Yun said in a statement following the release of existing home sales data that despite the slowdown, there is a difference between the current market dynamic and the 2008 housing crisis.

“The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today,” Yun said.