Purchases of new homes in the U.S. rose in May by the most in 22 years, indicating the industry is rebounding from a winter-induced lull at the start of the year.
Sales increased 18.6 percent, the biggest one-month gain since January 1992, to a 504,000 annualized pace, figures from the Commerce Department showed today in Washington. The reading exceeded all forecasts in a Bloomberg survey of 74 economists and was the strongest since May 2008.
Today’s report, following data yesterday that showed a pickup in existing home sales, shows housing is gathering momentum as employment improves and borrowing costs stabilize. Builders such as Hovnanian Enterprises Inc. are optimistic the recovery is on track after harsh weather in early 2014 hurt demand.
“Housing is beginning to revive,” said Stephanie Karol, an economist at IHS Global Insight, the top forecaster of new home sales in the past two years, according to data compiled by Bloomberg. “It’s a step in the right direction. The job market is helping, and there was an expansion of supply the past couple of months.”