New homes sales soar unexpectedly

Sales of newly constructed single family homes rose 11% over May, but median price fell 3%.

NEW YORK (CNNMoney.com) -- Sales of newly constructed single-family houses spiked 11% in June to an annualized rate of 384,000 homes.
The gain over May was much greater than expected. A consensus of housing industry analysts had forecast seasonally adjusted sales of 352,000, according to Breifing.com. However, sales are still 28% below the levels of a year ago, when new homes sold in June at an annualized rate of 530,000.
Four years ago, during the height of the housing boom, the sales rate for June was 1,374,000, nearly three-and-a-half times higher than last month.
"That is really good news," said Peter Morici, an economics professor at the University of Maryland who had forecast June sales to be at the 350,000 level. "Considering what's going on in existing home sales, with all the foreclosure activity sending down home prices, for new homes to jump like that is a good indicator that the economy is bottoming out."
Builders have been a little more optimistic about market conditions lately and this report should further buoy their spirits. An index of builder confidence from the National Association of Home Builders rose to 17 this month after languishing in single-digit territory.
As a result, builders have stepped up their pace of construction; in June, they began building single-family housing units at an annualized rate of 470,000, a 14.4% jump over May.
The median price paid for a house sold in June 2009 was down about 3% to $206,200; the mean price was $276,900.
By the end of the month, the inventory of new homes had dropped to 281,000, an 8.8 month supply at current rates of sale. Last month, there were enough homes on the market to last 10.2 months at that rate.