New Home Sales Jump Sharply

Americans snapped up new homes in June at the fastest pace in five years, a sign the housing recovery is strengthening.

Sales of newly built homes rose 8.3 percent last month to a seasonally adjusted annual rate of 497,000, the Commerce Department said Wednesday. That's the highest since May 2008 and up from an annual rate of 459,000 in May, which was revised lower.

While sales are still below the 700,000 pace consistent with healthy markets, they have risen 38 percent in the past 12 months. That's the biggest annual gain since January 1992.

The number of new homes available for sale at the end of June was 161,000. That's only slightly higher than May's level and 11 percent above year-ago levels. At the current sales pace, it would take only 3.9 months to exhaust the supply of new homes on the market—matching a nine-year low. A supply of six months is typical in healthy markets.

Limited homes on the market have kept sales from rising even faster. Still, higher prices, growing sales and the tight supply have made builders more optimistic about their prospects. That's led many to ramp up construction and add jobs.

Builder confidence rose in July to the highest level in seven years, according to a NAHB survey. And customer traffic and builders' outlook for single-family home sales over the next six months are at the highest levels since the housing bubble burst in 2006.