Washington, DC, June 26, 2006--Sales of new homes unexpectedly increased 4.6% to a seasonally adjusted annualized rate of 1.234 million in May, the Commerce Department estimated Monday.
Sales were running at the fastest pace since December after three straight increases, confounding experts looking for housing sales to slump. Sales are down 5.9% in the past year.
Economists were looking for about a 2% decline in sales in May to a 1.15 million pace. April's sales rate was revised lower to 1.18 million from 1.20 million.
The number of new homes on the market fell 0.7% to 556,000 in May from a record 560,000 in April. The inventory fell to a 5.5-month supply from 5.8 months in April. The inventory ratio peaked at 6.4 months in February.
Builders have said they are cutting prices and offering incentives to boost sales. The median price of a new home was $235,300 in May and is up 3.1% in the past year, down from a revised 4.1% gain in the 12 months ending in April. Sales increased 6% in the South, 5.3% in the West and 2.7% in the West. Sales fell 7.9% in the Northeast.
The government cautions that its housing data are subject to large sampling and other statistical errors. It can take up to six months for a trend in sales to emerge. New-home sales have averaged 1.17 million per month over the past six months, unchanged from the six-month period ending in April.
