New Home Sales Race to Two-Year High in May

WASHINGTON | Mon Jun 25, 2012 10:04am EDT (Reuters) - New single-family home sales surged in May to a one-year high and prices rose from a year ago amid tightening supply, further signs the housing market was gaining some momentum. The Commerce Department said on Monday sales jumped 7.6 percent to a seasonally adjusted 369,000-unit annual rate, the highest since April 2010. Economists polled by Reuters had forecast sales at a 346,000-unit rate last month from April's 343,000-unit pace. March's sales pace was revised up to 347,000 units from the previously reported 332,000 units. Compared to May last year, new home sales were up 19.8 percent. The housing market is showing signs of life even as the broader economy is weakening, and residential construction is expected to contribute to gross domestic product this year for the first time since 2005. Data last week showed a jump in home building intentions in May and a fourth straight month of gains in the median price of a previously owned home. The improving housing market picture was further enhanced by a 5.6 percent rise in the median price of a new home to $234,500 from May last year. While the inventory of new homes on the market edged up 0.7 percent to 145,000 units last month, it remained near record lows. At May's sales pace it would take 4.7 months to clear the houses from the market, the lowest since October 2005, down from 5.0 months in April. New home sales last month were buoyed by a 36.7 percent jump in the Northeast and a 12.7 percent rise in the South. Sales in the West fell 3.5 percent and were down 10.6 percent in the Midwest.

Mortgage Rates Drop Again to Record Lows

WASHINGTON (AP) – Average rates on 30-year and 15-year fixed mortgages this week fell to record lows for the sixth straight week. Cheap mortgages continue to help boost prospects for home sales this year. Mortgage buyer Freddie Mac says the average rate on the 30-year loan dropped to 3.67%. That's down sharply from 3.75% last week and the lowest since long-term mortgages began in the 1950s. The 15-year mortgage, a popular refinancing option, declined to 2.94%. That's down from 2.97% last week. Rates on the 30-year loan have been below 4% since early December. The low rates are a key reason the housing industry is showing modest signs of a recovery this year. A drop in rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. A Federal Reserve survey issued Wednesday showed the economy growing moderately in most regions of the country this spring as companies continued hiring. Manufacturing and home sales improved in most of the Fed's 12 regional districts, as did residential and commercial construction. In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market, breaking ground on more homes and requesting more permits to build single-family homes later this year. Mortgage applications rose by 1.3% during the week ended June 1, the Mortgage Bankers Association reported Wednesday, mainly because more people applied to refinance their homes.