US new home sales up 2.1 per cent to 476,000

The number of new home sales in the US rose from 466,000 to 476,000 month-on-month in May, versus expectations of 462,000. The latest increase represents the third straight month of gains, and new home sales are now at their highest level since July 2008.

The 2.1 per cent monthly rise is encouraging, but less than the 3.3 per cent increase in April. Year-on-year, the number of new homes sold was up 29 per cent.

Earlier on, we saw mixed data on house prices in April, with the FHFA recording a weaker than expected 0.7 per cent rise and S&P/Case-Shiller reporting a stronger than expected 1.72 per cent rise.

Home sales will continue to be watched over the coming months for any signs of difficulty deriving from the increase in mortgage rates. However, analysts think that the jump in rates will not be enough to upset the recovery in the housing market.

The beginnings of a recovery in the housing market? (Chart: New homes sales 2003 to date)

Source: US Census Bureau