New homes sales rebound 2.9% in May

WASHINGTON — Sales of new homes rebounded in May, helped by strong sales gains in the South and West.

Sales new single-family homes rose 2.9% last month to a seasonally adjusted annual rate of 610,000, the Commerce Department reported Friday. That followed a 7.9% drop in sales in April which was the biggest monthly decline in eight months.

Sales gains of 6.2% in the South and 13.3% in the West overcame big declines of 25.7% in the Midwest and 10.8% in the Northeast. The Midwest drop was the largest in that region in nearly three years.

The median price of a home sold last month rose to a record $345,800, up 16.8% from a year ago. Prices have been increasing as demand has outstripped supply, in part because of a shortage of available building lots.

The rebound in May sales had been expected following the big April drop. Sales of previously owned homes also rose last month. The National Association of Realtors reported Thursday existing home sales, a much larger market than new homes, increased 1.1% in May to a seasonally adjusted annual sales rate of 5.62 million.

The strong demand for homes reflects a healthy labor market which has seen steady job gains that has sent the unemployment rate down to a 16-year low of 4.3%.

The number of homes for sale rose 1.5% in May to 268,000, which represented a 5.3 month's supply at the May sales pace, the same as April but up from a supply of 4.9 months in March.

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