Home Sales Rose in May, While Median Sales Prices Fell

Sales of new homes again defied predictions of a slowdown in May and rose 4.6 percent, but median sales prices fell and the U.S. Northeast experienced its slowest sales tempo in nearly two years, according to a government report.
 
The pace of new home sales rose to a seasonally adjusted 1.234 million unit annual rate from a downwardly revised 1.180 million unit pace in April, the Commerce Department said in a report that showed some signs of demand strength.

The report follows a stronger-than-expected 5 percent increase in May U.S. housing starts last week. The Commerce Department earlier on Monday revised upward data for housing permits, showing that they fell just 1.4 percent in May, compared to an initially reported 2.1 percent fall.

Economists polled by Reuters were expecting new home sales to slow in May to a 1.150 million unit pace from an originally reported 1.198 million unit rate in April. The March sales pace also was revised downward to 1.114 million unit rate from a previously reported 1.142 million pace.

"On the whole, this is a comforting report to those worried about the housing market there. There is no sign of a precipitous decline in demand," says Richard DeKaser, chief economist at National City Corp. in Cleveland, Ohio.

Still, compared with a year earlier, the May sales pace was down 5.9 percent.

Median selling prices fell 4.3 percent from April to $235,300, a figure that was still 3.1 percent above the year-ago median price of $228,300.

The closely watched supply of new homes for sale at the end of May fell 0.7 percent to 556,000, from a downwardly revised 560,000 in April, which was a record level.

The homes for sale figure represented a 5.5 months' supply at the current sales pace, compared to a 5.8 months' inventory in April.

May new single-family home sales in the U.S. Northeast fell 7.9 percent to an annual pace of 58,000, the slowest rate since July 2004. In the South, sales climbed 6.0 percent to an annual rate of 669,000 units while in the West, sales rose 5.3 percent to a pace of 317,000 units. In the Midwest, sales edged up 2.7 percent to a pace of 190,000 units.