Sales of new homes increased in July, a sign that buyers might be reentering the market even as mortgage rates soar to multi-year highs.

New home sales rose 4.4% from June to July to a seasonally adjusted annual rate of 714,000, according to a report Wednesday from the Census Bureau. The reading comes despite persistently high mortgage rates.

Sales in July were 31.5% higher/lower than in July 2022.

The median sales price for a new home was $436,700 in July, an increase from the month before.

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Mortgage rates are much higher now than they were a year ago because the Federal Reserve has been hiking rates consistently since March 2022. Mortgage rates are now more than double what they were right before the Fed started raising rates — making homes increasingly unaffordable.

As of Tuesday, the average rate on a 30-year fixed-rate mortgage has soared to 7.49%, according to Mortgage News Daily. That marks a nearly 0.5 percentage point increase in just the past month alone. The last time rates were this high was November 2000.

During the height of the pandemic, when the housing market became red hot, homebuyers were able to lock in ultra-low mortgages of less than 3%.

Wednesday’s new home sales report comes a day after the National Association of Realtors released its existing home sales data for July. That showed that existing home sales fell by 2.2% from June to July to a seasonally adjusted rate of 4.07 million.

“Two factors are driving current sales activity – inventory availability and mortgage rates,” said NAR chief economist Lawrence Yun. “Unfortunately, both have been unfavorable to buyers.”

The dynamic between new and existing homes is an interesting one right now due to the rapidly rising mortgage landscape.

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Because mortgage rates have increased so much, owners of existing homes who have mortgages with rates locked in at those low pandemic levels are putting off selling because they want to keep their historically low rates. That means less existing home inventory on the market, making new homes more of a hot commodity.

The number of housing starts, which measures the change in the number of new residential buildings that began construction, ticked up in July, in part because of the inventory pressure from consumers holding onto their existing homes.