New home sales grew 6.7% in May, reaching the highest level since November 2017, reports CNBC. The growth was largely attributed to sales in the South, which surged to their highest level in nearly 11 years, rebounding 17.9 percent to a rate of 409,000 units in May. The increase ended two straight months of declines.
Last month's surge in new home sales unwound April's drop. Economists polled by Reuters had forecast new home sales, which make up 11 percent of housing market sales, rising only 0.7 percent to a pace of 667,000 units in May.
Sales tumbled 10.0 percent in the Northeast and dropped 8.7 percent in the West. They were unchanged in the Midwest. New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They increased 14.1 percent from a year ago. New home sales are getting a boost from an inventory crunch in the market for previously owned houses.Supply has lagged strong demand for housing, which is being driven by a robust labor market, leading to a sharp increase in home prices. Economists say high mortgage rates so far do not appear to be dampening demand.
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