ConDig (25-Jun-18).  Sales of new single-family homes in the US surged 6.7% in May to a new yearly high as a robust economy continues to underpin demand for homes, according to new figures from the Department of Housing and Urban Development and the US Census Bureau.

The increase pushed new home sales to a new seasonally adjusted annual rate of 689,000 units last month, which was the highest the level since November 2017, compared with a downwardly revised April total of 646,000 units.

Inventory of new homes for sale was 299,000 in May, which is a 5.2-month supply at the current sales pace. The median sales price was $313,000.

“Sales numbers continue to grow, spurred on by rising home equity, job growth and reports of a greater number of millennials entering the single-family housing market,” said National Association of Home Builders (NAHB) chairman Randy Noel.

Regionally, new home sales rose 17.9% in the South to a post-recession high and remained unchanged in the Midwest. Sales dropped 8.7% in the West and 10% in the Northeast.

“We saw a shift to more moderately priced home sales this month, which is an encouraging sign for newcomers to the market,” said NAHB senior economist Michael Neal.

“Since the end of the Great Recession, inventory has tracked the pace of sales growth. While we expect continued gains in single-family housing production, inventory may be partially constrained by ongoing price increases for lumber and other construction materials.”

It comes as the construction of new homes in the US shot up 5% to hit a near 11-year high in May as single-family and multifamily sector starts jumped higher, but building permits fell.

But US homebuilder confidence also unexpectedly dropped in June in the wake of higher lumber costs following the roll out of tariffs on Canadian imports.