New home sales race to two-year high in May

WASHINGTON, Mon Jun 25, 2012 – New single-family home sales surged in May to a two-year high and prices rose from a year ago, further signs the housing market recovery was gaining some momentum.

The Commerce Department said on Monday sales jumped 7.6 percent last month to a seasonally adjusted 369,000-unit annual rate, the highest since April 2010.

That was well above economists’ expectations for a 346,000 pace and the highest since April 2010, when sales were inflated by a homebuyer tax credit.

The report was the latest evidence of a broadening recovery in the housing market even as the economy is weakening. The sector had long been the Achilles heel of the economy’s recovery from the 2007-09 recession.

“The housing market recovery remains on track. While we still have a long ways to go, healing is taking place and we are starting to see improvement,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, N.C.

Reports last week showed a jump in home building permits and a fourth straight month of gains in the median price of previously owned homes.

Underscoring the firming tone, new home sales in May were up 19.8 percent from their year-ago level.