Sun Sentinel Broward Edition

New home sales rise above expectatio­ns

Purchases in May highest in 7 years

- By Michelle Jamrisko Bloomberg News

WASHINGTON — Purchases of new homes rose in May to the highest level in seven years, signaling the industry is gaining momentum heading toward the second half of the year.

Sales climbed 2.2 percent to a 546,000 annualized pace, exceeding all forecasts in a Bloomberg survey of economists and the most since February 2008, Commerce Department data showed Tuesday. Readings for February through April were revised up

Stronger employment and income prospects are bolstering would-be home buyers, allowing them to take advantage of relatively cheap borrowing costs. The pickup in demand points to gains in constructi­on of residentia­l real estate that will contribute to gross domestic product for the rest of the year.

“Look for significan­t increases in housing starts — we have to catch up to these demand numbers,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York, whose forecast for 540,000 sales was among the closest in the Bloomberg survey. “This could be the best year for housing in terms of how much it contribute­s to GDP since 2012.”

The median forecast of 71 economists surveyed by Bloomberg called for the pace to accelerate to 523,000. The Commerce Department revised the April reading up to a 534,000 pace from a previously estimated 517,000.

Another report Tuesday showed orders for business equipment rose in May for the second time this year, indicating demand for U.S.made manufactur­ed goods is stabilizin­g. Bookings for non-military capital goods excluding aircraft increased 0.4 percent last month after falling 0.3 percent in April, Commerce Department data show. Orders for durable goods items meant to last at least three years declined1.8 percent, reflecting a drop in the aircraft category.

The Commerce Department’s report on newhome sales showed that the median sales price declined 1 percent from May 2014 to $282,800.

The increase in demand last month was led by an 87.5 percent surge in the Northeast, the biggest gain since July 2012. The West climbed 13.1 percent, while sales fell in the Midwest and South. The setback in the South could have been caused by floods in parts of Texas last month.

The supply of homes at the current sales pace declined to 4.5 months from 4.6 months in April. There were 206,000 new houses on the market at the end of May, the same as in the prior month.

New-home sales, which account for almost 10 percent of the residentia­l market, are tabulated when contracts are signed. That makes them a timelier barometer than transactio­ns on existing homes.

Purchases for previously owned homes rose in May to their fastest pace since November 2009, National Associatio­n of Realtors data showed Monday. Closings increased 5.1percent to a 5.35 million annualized rate as the share of sales to first-time buyers matched the strongest level since September 2012.

 ?? MARK HUMPHREY/AP ??
MARK HUMPHREY/AP

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