Sales of new American homes rose in May to the fastest pace in five years, a solid gain that added to signs of a steadily improving housing market. The Commerce Department says sales rose 2.1% last month compared with April to a seasonally adjusted annual rate of 476,000, the highest level since July 2008. The median price of a new home sold in May was $263,900, up 3.3% from a year ago.
Sales of new homes remain below the 700,000 annual pace that's considered healthy by most economists. But the pace has increased 29% from a year ago. Analysts say the housing recovery is looking more sustainable and should continue to boost economic growth this year, offsetting some drag from higher taxes and federal spending cuts. (Read more housing sales stories.)