AP Economics Writer
WASHINGTON (AP) -- Sales of new homes rose in May to the fastest pace in five years, a solid gain that added to signs of a steadily improving housing market.
New home sales rose 2.1 percent last month compared with April to a seasonally adjusted annual rate of 476,000, the highest level since July 2008, the Commerce Department reported Tuesday.
The median price of a new home sold in May was $263,900, up 3.3 percent from a year ago.
Sales of new homes remain below the 700,000 annual rate that's considered healthy by most economists. But the pace has increased 29 percent from a year ago.
Analysts say the housing recovery is looking more sustainable and should continue to boost economic growth this year, offsetting some drag from higher taxes and federal spending cuts.
The sales gains in May were led by a 40.7 percent increase in the Midwest followed by a 20.7 percent gain in the Northeast. Sales were also up 3.6 percent in the West but they fell 9 percent in the South.
The inventory of unsold homes rose 2.5 percent to 161,000 in May, the highest level since August 2011 but still just 13 percent higher than the record low for inventories set in July 2012. Prices of new homes have been rising in part because more people are bidding on a limited number of homes.
The National Association of Realtors reported last week that sales of previously occupied homes surpassed 5 million in May. It was the first time that's happened in 3
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.