May New Home Sales Top Expectations, Prices Rise

by Christopher Freeburn | June 25, 2012 11:55 am

Sales of new homes rose 7.6% in May, hitting an seasonally adjusted annualized pace of 369,000 units, according to data released by the Commerce Department Monday morning[1]. That marked the best rate since April 2010, Reuters noted.

It also beat a Reuters forecast of economists, who had predicted an annualized rate of 346,000 units.

The government revised upward March’s new home sales from an annualized rate of 332,000 units to a pace of 347,000 units.

New home sales rose 19.8% compared to May 2011, but remain just about a quarter of the 1.389 million unit annual pace seen in July 2005. Sales rose by 36.7% in Northeast states, while Midwestern states saw a drop of 10.6%.

Prices for new homes also rose in May. The median price for a new home increased 5.6% to $234,500 compared to May 2011.

The number of new homes on the market increased last month by 0.7% to 145,000. It would take 4.7 months to sell all available new homes if sales continue at May’s pace.

The positive news did little for homebuilders, however. On a Monday that started off on the wrong foot for equities overall, big homebuilders such as Toll Brothers (NYSE:TOL[2]), D.R. Horton (NYSE:DHI[3]) and Ryland (NYSE:RYL[4]) got punished as well, down 2.5%, 1.77% and 1.78%, respectively in midday trading.

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