The housing market is heating up, but it's still far from sizzling.
Sales of newly constructed homes rose in May to an annual rate of 546,000, the Census Department announced Tuesday. That was up 2.2% from a month earlier, and the highest pace of new-home sales since February 2008.
Economists had expected the number to drop from April. The rise in new homes sales is only the latest news that the housing market — which many economists thought would disappoint again this year — is picking up steam.
The new Census data comes after The National Association of Realtors said Monday that existing home sales rose in May as well. hitting an annualized rate of 5.35 million. Excluding November 2009, when demand was bolstered by the expiration of a stimulus tax credit, that marked the fastest pace in nine years.
Still, the housing market rebound has a long way to go. As CalculatedRisk points out, even with the recent increase, the current pace of new home sales is still only on par with the pace of sales at the bottom of previous recessions. And we're still well off the pace at the top of the last housing boom, which peaked at nearly 1.4 million new homes sales a year in mid-2005. But that, in retrospect, was clearly too high a figure.