Sales of new U.S. homes climbed more than forecast in May to the highest level in almost five years, a sign of continued strength in a market that’s helping fuel economic expansion.
Purchases rose 2.1% to an annualized pace of 476,000 homes, exceeding all estimates in a Bloomberg survey and the most since July 2008, the Commerce Department said today in Washington. The median selling price climbed 10.3% from May 2012.
New and previously owned homes are in demand, driving residential construction and aiding the economic expansion. Consumers who long held off on purchases are entering the market even as borrowing costs increase, encouraged by rising property values and gains in employment.
“The housing recovery is alive and well and has a long way to go, and higher rates aren’t going to choke it off,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who projected a gain to 475,000, matching the highest in the Bloomberg survey. “‘It’s given the economy, or will give the economy, a lot of oomph.”
The median estimate of 74 economists surveyed by Bloomberg called for a gain to 460,000. Projections ranged from 435,000 to 475,000. Monthly sales data all the way back to February were revised up, with April now at a 466,000 annualized rate compared with a previously reported 454,000 pace.
Other reports today showed manufacturing is stabilizing, price gains for existing houses are accelerating and consumer confidence is climbing.
Orders for U.S. durable goods, those meant to last at least three years, climbed a larger-than-projected 3.6% for a second month reflecting broad-based gains, according to figures from the Commerce Department. The median forecast of 81 economists surveyed by Bloomberg called for a 3% advance.
Home prices in 20 U.S. cities rose 12.1% in April from the same month in 2012, the biggest year-over-year gain since March 2006, a report from S&P/Case-Shiller showed. Property values increased 1.7 in April from the prior month following a 1.9% March advance, marking the biggest back- to-back gains since records began in 2000.
The Conference Board’s index of U.S. consumer confidence increased to 81.4 in June, the highest level since January 2008, from 74.3 a month earlier, data from the New York-based private research group showed.