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New and Existing Home Sales Make Strong Gains in May

The US housing market showed some solid signs of improvement this week as a pair of reports showed larger than expected gains in both new and existing home sales. The existing home sales report, issued Monday by the National Association of Realtors, showed a 4.9 percent uptick from April to May to an adjusted pace of 4.89 million units. It marked the biggest single-month improvement in nearly two years and the pace was well above the pace of 4.73 million projected by economists in a recent Bloomberg survey. Of course, sales through the first five months of the year are still below where they were at the same time a year ago, primarily because of extreme winter weather that hindered the start of the spring selling season, especially on the east coast.

If the increase in existing sales was encouraging to housing insiders, those same professionals were virtually giddy after Tuesday's report on new home sales. The Commerce Department revealed that sales of newly built homes surged 18.6 percent from April to May, with homes selling at their fastest pace in six years. The increase from April to May was the biggest in over 14 years, and the 504,000-unit annualized pace was nearly 15 percent higher than the consensus projection offered by the economists in the Bloomberg survey. Sales of new homes were also up substantially on a year-over-year basis, unlike existing sales, with Tuesday's report showing a gain of nearly 17 percent compared to May 2013. The gains were also widespread, with new home sales increasing in all four regions with both the South and Midwest seeing sales reach their fastest pace in multiple years.

June 24, 2014