New home sales rose sharply in August to the highest rate since 2022, an encouraging development for a housing market plagued by high prices and mortgage rates.

New home sales rose 20.5% in August to an 800,000 annual rate, according to a Wednesday report from the Census Bureau. The number of new home sales is 15.4% higher than in August 2024.

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The median sales price for a new home was $413,500 in August, 4.7% higher than in July.

Wednesday’s report could be a boon to President Donald Trump’s agenda. He has repeatedly castigated the Federal Reserve and Chairman Jerome Powell for not cutting interest rates sooner, blaming the higher rates for making it difficult for people to purchase homes.

As of Wednesday morning, the average rate on a 30-year, fixed-rate mortgage was at 6.26%, according to Freddie Mac, which tracks rate changes. That is down from a peak last year of above 6.95% around the start of July, and is the lowest that mortgage rates have been since October of last year.

The lower mortgage rates are partly driven by market expectations that the Fed would cut interest rates, which it finally did this month. Investors are also expecting more interest rate cuts this year.

“As we have maintained for months, the demand for housing remains solid; the problem has been affordability,” said Richard de Chazal at William Blair. “If we take this data at face value, it clearly implies that new homebuyers were starting to see this as less of a hurdle in August, given the surge in activity.”

De Chazal pointed out that the S&P Case/Shiller House Price Index has dropped for the last four consecutive months, helping homebuyers. He said there was likely “pent-up demand on the sidelines” and that the lower prices and rates were helping sales.

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“If buyers now believe the Fed is about to embark on a sustained easing cycle, this may also have encouraged new buyers into the market,” he added.

The August data for existing home sales hasn’t been released, but existing home sales in July rose 2% to a seasonally adjusted annual rate of 4.01 million, the National Association of Realtors reported.