Sales of single-family homes rise 12.5% to 1,157,000, aided by low mortgage rates.
June 25, 2003: 10:11 AM EDT
WASHINGTON (Reuters) - Sales of new U.S. homes hit a record pace in May, the government said Wednesday, buoyed by continued low lending rates and the end of the war in Iraq.
The Commerce Department said sales of new single-family homes rose 12.5 percent to a record 1,157,000 annual rate, surprising analysts who had expected sales to rise to a more modest 1,034,000 rate.
May's hefty gain followed a revised 1 percent gain in April to a 1,028,000 annual pace.
With mortgage rates at their lowest in decades, homebuyers have been snapping up both new and existing homes, providing a key pillar of support for the sluggish U.S. economy.
Even the brief war in Iraq, which had raised uncertainty about whether homebuyers might keep to the sidelines, was not enough to offset the lure of low mortgage rates.
The May percentage gain was the largest since September 1993 and left the inventory of new homes on the market at only 3.5 months' worth, the lowest in more than four years.
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