New Home Sales Rise to a 2-year High

Mukesh Buch
25 Jun, 2012
New York City

New home sales increased more than expected in May as construction surged in the Northeast. Median home prices edged up and inventory of unsold homes held below five months.

[R]10:30 AM New York – New home sales increased more than expected in May as construction surged in the Northeast. Median home prices edged up and inventory of unsold homes held below five months.[/R]

New home sales for single family increased to a two-year high in May and median home price increased as supply tightened.

The Commerce Department said home sales increased 7.6% to a seasonally adjusted annual rate of 369,000 units, nearing the high last seen in April 2010 of more than 400,000.

New home sales surged 19.8% from a year ago month as mild weather played a key role in lifting construction in the Northeast. However, new home sales are still at the quarter of the peak of 1.389 million annual pace in July 2005.

Housing market remains mired in over supply, rising foreclosures and constrained lending by banks and high unemployment across the nation.

New home sales account for 7.5% of all home sales and at the peak of the housing market in the quarters spread over 2005 and 2006, new home sales accounted for 20% of total home sales.

New home sales in May increased 36.7% in Northeast, record since July 2009, rose 12.7% in the South to a 2-year high, dropped 10.6% in the Midwest and fell 3.5% in the West.

The inventory of unsold homes at the end of the month inched up 0.7% to 145,000 units or to 4.7 months of supply.

Both median and average home prices declined from a month ago but rose modestly from a year ago.

Median home price increased 5.6% from a year ago to $234,500.

The slow and uneven recovery in the housing market is expected to contribute to gross domestic product for the first time since 2005.

The April data was unrevised at 343,000 unit rate and March estimate was revised upwards by 15,000 to 347,000.