U.S. new-home sales climbed 6.7% in May

WASHINGTON — Sales of new U.S. homes jumped 6.7 percent in May, with purchases in the South accounting for all of the monthly gains.

The Commerce Department said Monday that new homes sold last month at a seasonally adjusted annual rate of 689,000, up from 646,000 in April. The South reported monthly sales growth of 17.9 percent, while sales were flat in the Midwest and fell in the Northeast and West.

For the first five months of this year, new-home sales have risen 8.8 percent as a solid job market and shortage of existing homes on the market have boosted demand. In a sign that buyers are eagerly seeking out properties among a diminished inventory, there was a 17.4 percent surge last month in the sale of homes before construction begins.

“With fewer buying options among existing homes, homebuyer demand is shifting toward new builds,” said Ben Ayers, senior economist at the insurance company Nationwide.

Buyers are also facing additional pressures as home values are generally rising faster than incomes and average 30-year mortgage rates have risen to 4.57 percent from 3.90 percent a year ago.

Aaron Terrazas, a senior economist at the real estate firm Zillow, said that sales growth was strong, yet construction was still running below historic levels given population growth.

“We’re building roughly 2.7 homes for every 10,000 Americans — well below historic averages from the 1980s and 1990s of about 4.2 homes per 10,000 residents,” Terrazas said.