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US new home sales drop from eight-year high
[WASHINGTON] New US single-family home sales fell in May from a more than eight-year high amid weakness in three regions, but the overall housing market remains intact.
The Commerce Department said on Thursday new home sales dropped 6.0 per cent to a seasonally adjusted annual rate of 551,000 units. April's sales pace was revised down to 586,000 units, still the highest since February 2008, from the previously reported 619,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 9.1 per cent of the housing market, sliding to a 560,000 unit-rate last month.
They were up 8.7 per cent from a year ago. New single-family home sales are extremely volatile month-to-month and preliminary figures are subject to large revisions because they are mostly drawn from building permits data.
April's jump in sales was seen by economists as unsustainable and May's drop left them at levels that probably offer a fair reflection of the new housing market.
The overall housing market is gaining steam, with a report on Wednesday showing home resales rose in May to a more than nine-year high. New home sales are likely to benefit from a chronic shortage of previously owned houses available for sale.
The housing market is being underpinned by a tightening labour market, which is starting to lift wages, a well as still very low mortgage rates.
Last month, the inventory of new homes on the market rose 1.2 per cent to 244,000, the highest since September 2009. At May's sales pace it would take 5.3 months to clear the supply of houses on the market, up from 4.9 months in April.
The median price for a new home rose 1.0 per cent from a year ago to US$290,400.
New single-family homes sales slipped 0.9 per cent in the populous South and tumbled 33.3 per cent in the Northeast. Sales in the West dropped 15.6 per cent. The West has seen a sharp increase in home prices amid tight inventories. Single-family homes sales surged 12.9 per cent in the Midwest.