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New Home Sales Surge to Five-Year High08-09-13 | News

New Home Sales Surge to Five-Year High

Sales of new homes increased by nearly 40 percent year-over-year in June, as the housing market continues to gain momentum across all sectors. Despite the improvements, the current annual sales rate of about half a million units remains well off the peak of the 1.28 million-unit rate set during the housing boom.

New home sales increased by more than eight percent between May and June, reaching a five-year high and further reinforcing the accelerating growth of the housing market.

Sales of new homes grew to an annual rate of 497,000 units (seasonally adjusted), a level of demand not seen since May 2008, the Census Bureau said last month. Sales in May were revised downward, however, from the 476,000-unit annual rate initially reported to a 459,000-unit rate. Sales for April and March were also slightly reduced.

Compared to June 2012 levels, new home sales are 38 percent higher, reflecting an uptick in the real-estate recovery that has struggled following modern record lows in 2011. Industry insiders appear to feel good about the market's indicators as well – the NAHB's homebuilder confidence index reported a positive market outlook in May and June for the first time since April 2006.

Before the housing market bubble burst in 2006, the sales rate for new homes reached as high as 1.28 million annually, nearly triple the June rate. Sales could break the 1 million-unit threshold again, economists say, if the economy returns to historic growth patterns. The supply of available new homes fell to 3.9 months at the current sales pace due to the sales surge, declining from a 4.2-months supply in May and matching the lowest level of the year.

Home prices, both for new and existing homes, also continue to increase. The median price of new homes was up 7.4 percent year-over-year, reaching $249,700 as prices clung near multi-year highs. The price of existing homes, measured year-over-year, has increased for 16 consecutive months through June.