Sales of new U.S. homes rose more than forecast in June to the highest level in five years, a sign builders are benefiting from a lack of supply of existing properties.
Purchases climbed 8.3% to an annualized pace of 497,000 homes, highest level since May 2008, the Commerce Department said today in Washington. The median estimate of 77 economists surveyed by Bloomberg called for a gain to 484,000.
The gains will keep propelling residential construction and home values, giving the world’s largest economy a boost. Growing employment and the desire to take advantage of historically low borrowing costs before they rise further will probably release pent-up demand from consumers who had held off during the recession and early stages of the expansion.
“It’s a builder’s market,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who forecast a gain to 500,000. “The housing market is poised for further gains and is a key component of the U.S. recovery overall.”
Stocks dropped, erasing earlier gains, as investors weighed Apple Inc. profit that topped estimates with a worse-than- estimated forecast from Caterpillar Inc. The Standard & Poor’s 500 Index declined 0.1% to 1,689.98 at 10:20 a.m. in New York.
Projections in the Bloomberg survey ranged from 415,000 to 518,000. The Commerce Department revised the May figure to 459,000 from a previously reported 476,000.
Sales jumped 38.1% from June 2012, the biggest year- over-year gain since January 1992.
The median selling price of a new home appreciated 7.4% to $249,700 last month from $232,600 in June 2012.
Purchases rose in three of four U.S. regions, led by an 18.5% surge in the Northeast. They climbed 13.8% in the West and 10.9% in the South. Demand dropped 11.8% in the Midwest.
The supply of homes at the current sales rate was 3.9 months, matching January’s level as the lowest since 2004 and down from 4.2 months in May. There were 161,000 new houses on the market at the end of June, up from 159,000 a month earlier.
Sales of new properties, which are tallied when purchase contracts are signed, are considered a more timely measure of the market than sales of previously owned dwellings, which are counted when a sale is final. New-home sales accounted for about 7% of the residential market in 2012.