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New Home Sales at 5-Year High but Supply Too Low

NEW YORK ( TheStreet) -- New home sales in the U.S. rose to a seasonally adjusted annual rate of 497,000 in June, the highest level since July 2008.

Sales of newly constructed homes climbed 8.3% from a downwardly revised estimate of 459,000 in May and up 38% from a year earlier.

Economists polled by Bloomberg expected new home sales to rise to 481,000 in June from the original estimate of 476,000 in May.

New home sales measure the number of newly constructed homes with a committed sale in a month. The June report is the first home sales report that factors in the impact of higher mortgage rates. The 30-year conventional fixed-rate mortgage backed up 100 basis points to about 4.5% between May and June.

The median sales price for new home sales in June was $249,700, down from $262,800 in May; the average sales price was $295,000, down from $307,400 in May.

Inventory of new homes for sale at the end of June was estimated at 161,000, unchanged from the previous month and continues to trail demand. The inventory represents 3.9 months of supply at the current sales pace.

Housing starts unexpectedly fell in June, though the decline was led by multi-family starts, which tend to be more volatile.

Still, homebuilders have been wary of overbuilding, although their sentiment as expressed in recent surveys has been mostly positive.

"Builders are responding to demand today, not tomorrow," Bank of America Merrill Lynch economist Michelle Meyer said in an interview Tuesday. "So they are keeping inventories lean."

-- Written by Shanthi Bharatwaj in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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