June 25 (Bloomberg) -- Demand for new U.S. homes rose more than forecast in May as mortgage rates dropped, bolstering the residential real-estate market while other parts of the world’s largest economy cool.
Purchases climbed to a 369,000 annual rate, up 7.6 percent from the prior month and the most since April 2010, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 67 economists was 347,000. The months’ supply dropped to the lowest in more than six years.
Falling borrowing costs and more affordable properties may keep luring buyers, even as a cooling job market and limited access to credit restrain the recovery. In a bid to reduce unemployment, sustain housing and prevent a global slowdown from stalling the expansion, the Federal Reserve last week extended a program to keep long-term interest rates low.
“Things are definitely improved,” Jed Kolko, chief economist at San Francisco-based Trulia Inc., which tracks home sales, said before the report. “There’s some good news on prices, and rising prices are a strong cue for developers.”
Stocks held earlier losses after the report amid concern that a meeting of European leaders later this week will fail to help contain the region’s debt crisis. The Standard & Poor’s 500 Index dropped 1.3 percent to 1,318.28 at 10:01 a.m. in New York.
Bloomberg survey estimates for new-home sales, which are counted when contracts are signed, ranged from 327,000 to 375,000. The April reading was unrevised at the previously estimated 343,000, while March and February were revised up.
The median sales price increased 5.6 percent from the same month last year, to $234,500, today’s report showed.
Purchases rose in two of four U.S. regions last month, led by a 37 percent jump in the Northeast, while the South climbed 13 percent. Demand dropped 11 percent in the Midwest and 3.5 percent in the West.
The number of newly constructed houses on the market edged up to 145,000 from a record low of 144,000 reached in April and March. The record high of 572,000 was reached in July 2006. The supply of new houses on the market at the current sales pace dropped to 4.7 months’, the lowest since October 2005, from 5 months in April.
In response to improving demand, builders broke ground on 516,000 single-family houses last month at an annual pace, up 3.2 percent from April and the most this year, the Commerce Department reported last week.