Sales of newly built, single-family homes surged 8.3 percent to a seasonally adjusted, annual rate of 497,000 units in June, their fastest pace in the last five years, according to data released by the U.S. Department of Housing & Urban Development (HUD) and the U.S. Census Bureau.
"New homebuyers are returning to the market in larger numbers as firming prices, shrinking inventories of homes for sale and improving local economies convince them that now is the time to make their move," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. "Meanwhile, the very low supply of new homes on the market is indicative of the difficulty that builders are having in keeping up with demand due to availability issues with regard to materials, credit, labor and lots for development."
Three out of four regions saw solid gains in new-home sales activity in June, with the Northeast, South and West posting increases of 18.5 percent, 10.9 percent and 13.8 percent, respectively. The Midwest posted an 11.8 percent decline following an above-trend bump in activity in May.
The inventory of new homes for sale declined to 161,000 units in June, marking a razor-thin, 3.9-month supply at the current sales pace. The months' supply of homes for sale has not fallen below this level since March of 2004.
"The takeaway from this report is that the housing recovery is solidly on track and isn't going to be derailed by slightly higher mortgage rates," said NAHB Chief Economist David Crowe. "After years of fence-sitting, buyers are back and are ready to move forward with an investment in homeownership."
Looking ahead, he said he anticipates further, though more incremental gains in sales through the end of this year.