This April 16, 2020 photo shows a real estate company sign that marks a home for sale in Harmony, Pa. U.S. new home sales plunged 15.4% in March as the lockdowns that began in the middle of the month began to rattle the housing market. The Commerce Department reported Thursday, April 23, that sales of new single-family homes dropped to a seasonally ajdjusted annual rate of 627,000 last month after sales had fallen 4.6% in February. (AP Photo/Keith Srakocic)
By Martin Crutsinger
Updated 12:04 pm ET
Sales of new homes rose a surprisingly strong 16.6 percent in May with the reopening of major parts of the country potentially fueling activity in the housing market.
The Commerce Department reported Tuesday that sales of new single-family homes rose to a seasonally adjusted annual rate of 676,000 last month.
That was a much better performance than expected. Many economists had forecast that sales would fall in May.
The new home sales numbers come just one day after the U.S. reported a 9.7 percent plunge in May sales of existing homes to an annual rate of 3.91 million, the slowest pace in nearly a decade.
There are hopes that the housing slump that occurred with the virus shutdowns could be coming to an end, though the millions of jobs lost to the pandemic could impede any rebound.
Nancy Vanden Houten, lead U.S. economist with Oxford Economics, said she expected a modest recovery in sales in the coming months following the big declines in the first quarter but she still expects a decline overall this year.
"The slow recovery in the labor market will limit the upside of any rebound in the housing market," she said.
The median price of a new home rose 4.9 percent to $317,900 in May after falling by 8.7 percent in April, a drop that was attributed to heavy discounting by builders in the midst of the coronavirus shutdowns.
The big sales rebound left activity in May 12.7 percent higher than a year ago.
Triller CEO, Sean Kim, joins Cheddar to discuss how content creators are looking for alternatives in the U.S. as TikTok's future hangs in the balance. Watch!
Uncle Nearest CEO Fawn Weaver joins Cheddar to talk alcohol warning labels, the future of the alcohol business and why she thinks DEI has a PR problem. Watch!
Shark Tank's Daniel Lubetzky, Founder of KIND Snacks, breaks down the FDA's new definition of healthy, plus, his thoughts on building a stronger democracy.
James Gallagher, CEO and Co-Founder of GreenLite, discusses the challenges of rebuilding the fire-affected LA area and how permitting complicates the process.
Super Bowl Champion, Julian Edelman, talks Chiefs' conspiracies, his fave TSwift song and his bet for Super Bowl LIX. Plus, the best time for a bathroom break.
