US new-home sales fell 10.5% in July, far steeper than economists expected, as mortgage rates near 7% continued to squeeze buyers and place homebuilder ETFs under closer scrutiny. Widely cited figures highlighted by The Kobeissi Letter put the seasonally adjusted annual pace at 607,000—the lowest in six months and, excluding January 2026, the weakest since November 2022—while an earlier Census Bureau-based account placed July sales at 661,000 after a revised June reading of 739,000; expected declines had been only about 1.4% to 2.5%. The Mortgage Bankers Association said total mortgage applications fell 1% last week, with purchase applications down 0.3% and 5% below a year earlier, refinance applications off 2% week over week and 17% year over year, and the average 30-year fixed conforming rate edging up to 6.78%. Weaker sales can feed into slower construction, softer building-materials demand, and pressure on builder margins, keeping funds such as the SPDR S&P Homebuilders ETF (XHB) and iShares U.S. Home Construction ETF (ITB) in focus unless yields and mortgage rates move decisively lower.