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May New Home Sales Top Expectations, Prices Rise

The seasonally adjusted annual sales pace is best since April 2010


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. 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.

May Housing Starts Drop, Permits Rise
May Housing Starts Drop, Permits Rise

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), D.R. Horton (NYSE:DHI) and Ryland (NYSE:RYL) got punished as well, down 2.5%, 1.77% and 1.78%, respectively in midday trading.

Article printed from InvestorPlace Media,

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