New single-family home sales rose to a two year high in May, giving some hope the housing market may be recovering. Sales jumped 7.6% last month to an adjusted 369,000 unit annual rate. This is the highest its been since April of 2010. Economists were expecting around 346,000.
While the housing market may be beginning to recover it still has a long way to go. May sales were only a quarter of the peak reached in July 2005 and the entire market is still constrained by an over abundance of previously owned homes.
“The level of new home sales in May was still quite depressed but the combination of more affordable prices and ultra-low mortgage rates appears to be supporting a decent rise off the bottom for housing demand,” said Michael Feroli, an economist at JPMorgan in New York.
Residential construction will also contribute to the GDP this year for the first time since 2005.