New single-family home sales surpassed expectations in May, rising 6.7 percent, when a previous Reuters poll of economists predicted only a 0.7 percent rise.
New home sales in the South pushed overall sales up, rising 17.9 percent to a rate of 409,000 units in May, as the region hit an 11 year high. This sales growth overall and in the South undid the previous declines over the past few months. CNBC reports that sales plateaued in the Midwest, but dropped in both the Northeast and West, 10 percent and 8.7 percent respectively. Meanwhile, existing home sales fell for the second month in a row as of May 2018.
The housing market is lagging overall economic growth, which appears to have regained speed in the second quarter after slowing at the start of the year. Growth estimates for the April-June period are as high as a 4.7 percent annualized rate. The economy grew at a 2.2 percent pace in the first quarter. At May's sales pace it would take 5.2 months to clear the supply of houses on the market, down from 5.5 months in April. Nearly two-thirds of the houses sold last month were either under construction or yet to be built.
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