Sales of newly built homes rose to a five-year high in June, boosting a key sector driving the economic recovery.
New-home sales leapt 8.3% last month to a seasonally adjusted rate of 497,000, the Commerce Department said Wednesday. That was the highest level since May 2008. Sales were up 38.1% from a year earlier. Economists had expected homes would sell at a 485,000 monthly pace, which would have been a 1.8% rise from the previously reported figure for May.
However, the report showed that sales were weaker in earlier months than previously reported. May's figure was revised down to 459,000 from 476,000, and April's figure also went down.
The strong sales pace in June caused inventory to tighten, pushing up home prices. The stock of new homes for sale at the end of June was 161,000. That would take 3.9 months to deplete at the current sales pace, the quickest since January.
Meanwhile, the median price for a new home sold in June was $249,700, up 7.4% from that time last year.
The strong figures are in line with other reports that indicate the housing market is helping boost the U.S. economic recovery. But rising home prices and mortgage rates could threaten to slow the gains in the coming months.
Earlier this week, the National Association of Realtors said sales of previously owned homes declined slightly in June from a month earlier, but were more than 15% higher from a year ago. On Tuesday, a federal housing agency said home prices rose 0.7% on loans backed by the government-controlled mortgage companies Fannie Mae and Freddie Mac.
Meanwhile, mortgage rates that began to rise in late May are up a full percentage point, to 4.68% for an average 30-year fixed-rate loan, according to the Mortgage Bankers Association. Still, economists have said many prospective homeowners would find higher rates to be affordable despite higher payments. Rising rates could also encourage many would-be buyers to move quickly before prices increase further.
New-home sales peaked in July 2005, when they hit an annual pace of nearly 1.4 million, and bottomed out in February 2011 with a rate of only 270,000.
June's new home sales rose in the Northeast, South and West but dropped in the Midwest.