WASHINGTON – Americans snapped up new homes in June at the fastest pace in five years, a sign the housing recovery is strengthening.
Sales of newly built homes rose 8.3 percent last month to a seasonally adjusted annual rate of 497,000, the Commerce Department said Wednesday. Thats the highest since May 2008 and up from an annual rate of 459,000 in May, which was revised lower.
While sales are still below the 700,000 pace consistent with healthy markets, they have risen 38 percent in the past 12 months. Thats the biggest annual gain since January 1992.
Theres an awful lot of headroom for more gains in new-home sales once the job market recovers more fully, said Jonathan Basile, an economist at Credit Suisse.
Home sales and prices have climbed since early last year, buoyed by solid hiring and low mortgage rates.
Housing has helped drive economic growth this year at a time when other parts of the economy have languished, such as manufacturing and business investment.
New-home sales make up only a small part of the market. But they have an outsize effect on the economy. Each home built creates an average of three new jobs and generates about $90,000 in tax revenue, according to data from the National Association of Home Builders.
One concern is that rising mortgage rates could slow sales in coming months. The average rate on the 30-year fixed mortgages was 4.37 percent last week – a full percentage point higher than in early May.
At the same time, mortgage applications to purchase homes have fallen in the past few weeks.
Rising demand and a tight supply of available homes for sale have pushed up prices. The median price of a new home in June was $249,700, up 7.4 percent from a year ago.