New-home sales see first increase this year

Sales of new U.S. homes jumped in May, reflecting gains in the West and South and interrupting a months-long skid as the residential real estate market adjusts to rising borrowing costs and still-elevated prices.

Purchases of new singlefamily homes increased 10.7 percent to an annualized pace of 696,000, the first gain this year, government data showed Friday. The figure followed an upwardly revised 629,000 in April. The median forecast in a Bloomberg survey of economists called for a rate of 590,000.

While growing affordability concerns have limited demand since the start of the year, many Americans still have the desire and wherewithal to buy a home. The pickup in sales may also reflect some buyers locking in their mortgage rate in anticipation of even higher borrowing costs.

Earlier this month, the average rate for a 30-year loan posted its largest one-week increase since the 1980s. It’s risen even further since then.

The new-home sales report, produced by the Census Bureau and the Housing and Urban Development Department, showed the median sales price of a new home rose 15 percent from a year earlier to a $449,000.

At the current sales pace, it would take 7.7 months to exhaust the supply of new homes.

That compares with 8.3 months in the prior month and 5.4 one year ago. Just 8 percent of the homes for sale in May had been completed.

A separate report last week showed U.S. homebuilder sentiment slid to a two-year low in June, the sixth straight decline, as rising inflation and higher mortgage rates weighed on demand.