CNBC’s Rick Santelli reports new home sales were 497,000, up 8.3 percent in June vs. 1.3 in May. It’s the highest annual rate since May 2008. Diana Olick weighs in on the “great number.”
Economists polled by Reuters had expected new home sales to rise to a 482,000-unit rate last month.
Compared with June last year, sales were up 38.1 percent, the largest increase since January 1992.
The third straight month of gains in new home sales, which are measured when contracts are signed, suggested the housing market was gaining more muscle and should allay concerns that higher mortgage rates could slow down momentum.
Mortgage rates have spiked in anticipation of the U.S. Federal Reserve starting to taper its generous monetary stimulus later this year. Rates still remain low and Fed Chairman Ben Bernanke last week expressed optimism the housing market recovery would continue.
Last month, the inventory of new homes on the market increased 1.3 percent to 161,000, the highest since August 2011, as builders continue to ramp up production to meet the growing demand.
Still, supply remains tight, putting upward pressure on prices. The median new home price increased 7.4 percent from a year ago.
At June’s sales pace it would take 3.9 months to clear the houses on the market, down from 4.2 months in May. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.