By Lucia Mutikani
WASHINGTON — Sales of new U.S. single-family homes jumped to a six-year high in May, the latest indication the housing market was starting to dig out of a recent soft patch.
The Commerce Department said Tuesday sales surged 18.6 percent to a seasonally adjusted annual rate of 504,000 units. That was the highest level since May 2008, while the increase was the biggest since January 1992.
April’s sales pace was revised down to 425,000 units from a previously reported 433,000 units.
Economists polled by Reuters had forecast new home sales rising to a 440,000-unit pace last month.
Compared to May last year, sales were up 16.9 percent, pointing to some momentum in the new homes market. New home sales are, however, very volatile because of the small size of the sample.
Higher mortgage rates and a surge in prices amid a dearth of properties available for sale have weighed on the housing market since the second half of 2013. But as mortgage rates level off, signs of life are emerging.
A report Monday showed sales of previously owned homes, the largest segment of the housing market, recorded their largest increase in more than 3½ years in May.
Last month, new home sales increased in all four regions. They hit a six-year high in the Midwest, while sales in the South were the highest since June 2008.
The inventory of new houses on the market was unchanged at 189,000 units. At May’s sales pace it would take 4.5 months to clear the supply of houses on the market, the fewest since June 2013. That was down from 5.3 months in April.
With inventories still tight, the median price of a new home last month increased 6.9 percent from May of last year. The pace of appreciation, however, is slowing. That should help to stimulate demand for houses.