New home sales increased from 343,000 in April to 369,000 in May. That was the most new homes sold in one month since April 2010 and easily topped the Briefing.com consensus expectation of 350,000 new homes sold.
For the past two months, a lack of supply of foreclosure properties has forced many potential homebuyers to buy non-distressed properties. This has caused the median existing home prices to rise, which in turn, has lowered the new home price premium. Essentially, new homes have become relatively more affordable. New home inventories fell from 5.0 months in April to 4.7 months in May. That is the lowest level since October 2005 and will put pressure on homebuilders to increase production.






