New home sales climb - East Valley Tribune: Business

New home sales climb

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Posted: Saturday, June 25, 2005 6:08 am | Updated: 7:19 am, Fri Oct 7, 2011.

WASHINGTON - Sales of new homes in May climbed to the second highest level in history, providing further evidence that low mortgage rates are still fueling a booming housing market.

The median price of the homes sold did fall sharply, however. Analysts blamed the decline on a change in the regional make-up of sales last month and said it was not a sign that a potential speculative bubble in some markets was in danger of bursting.

They predicted that sales of both new and existing homes would remain strong through the summer with home prices continue to post double-digit increases compared to a year ago.

However, they said sales and prices would likely start to taper off in the fall if mortgage rates finally begin to rise, something that has not occurred so far this year.

‘‘The big key going forward will be what happens to longterm interest rates,’’ said David Seiders, chief economist at the National Association of Home Builders. ‘‘I think we will see some modest fade in the numbers for both new and existing homes by the end of the year.’’

The Commerce Department report Friday said that sales of new single-family homes rose by 2.1 percent last month to a seasonally adjusted annual rate of 1.3 million homes.

The median, or mid-point, price for sales last month fell by 6.5 percent to $217,000. Analysts attributed the decline to a big drop in sales in the Northeast, where homes are more expensive, and a big rise in sales in the Midwest, where homes are cheaper.

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