Americans bought new homes in May at the fastest pace in more than two years. The increase suggests a modest recovery is continuing in the housing market, despite weaker job growth.
The New York Times
The Commerce Department said on Monday that sales of new homes increased 7.6 percent in May from April, to a seasonally adjusted annual rate of 369,000 homes. That is the best pace since April 2010, the last month that buyers could qualify for a federal home-buying tax credit.
Even with the gains, the annual sales pace is less than half the 700,000 that economists consider to be healthy.
Yet other signs show the housing market is slowly improving nearly five years after the bubble burst.
Builders are gaining confidence in the market and starting to build more homes. Mortgage rates have plunged to the lowest levels on record, making home buying more affordable. Prices remain low and have started to stabilize. And sales of previously occupied homes are much higher than the same time last year.
The median price of a new home sold in May edged down 0.6 percent from April, to $234,500. But the median price was 5.6 percent higher than a year earlier.
One reason prices could rise is that the supply of new homes for sale remains extremely low. Just 145,000 new homes were for sale in May. That is not much higher than the 144,000 available in April, which was the lowest supply on records dating back to 1963.
“With no excess inventory of unsold new homes, any sustained rebound in new-home sales should quickly translate into firmer prices,” said Steven Wood, chief economist at Insight Economics.
Builders are responding to the low supply. In May, they requested the most permits to start construction on homes and apartments in three and a half years.
The gains in new homes sold were concentrated in two regions of the country last month. Sales surged 36.7 percent in the Northeast and 12.7 percent in the South. Sales fell 10.6 percent in the Midwest and were down 3.5 percent in the West.