Dive Brief:
- New single-family home sales increased 3.5% between May and June to an annual rate of 592,000, the Commerce Department reported Tuesday. June's rate was 25.4% above the rate of new home sales in June 2015.
- June's new home sales pace marked the strongest rate since February 2008. The median sales price of new homes sold last month was $306,700, up from $288,800 in May.
- Sales surged 10.9% in the West and 10.4% in the Midwest, while sales slipped 0.3% in the South and 5.6% in the Northeast.
Dive Insight:
New home sales, which represent approximately 10% of all home sales, surpassed expectations, as economists surveyed by The Wall Street Journal predicted only a slight rise to a 559,000 pace.
The gain in new home sales last month likely resulted from low mortgage rates and the ongoing lack of inventory. When buyers can't find an available existing property, they are turning to new options, according to CNBC.
Tight inventory conditions have strained the housing market's recovery and pushed up prices. Zillow reported last month that starter home prices grew at double the pace of high-end homes between May 2015 and May 2016. That price increase was due largely to the major dip in starter-home inventory, which has led to intense competition for available homes on the market.
Residential industry reports this month have been mixed, as builder confidence slipped one point and housing starts increased 4.8%. Today's report will be followed by pending home sales Wednesday.
