New home sales at 4-month high, supply drops
May's new home sales figure will show that housing market is fairing better. Reuters

New single-family home sales grew by 7.6 percent from April to a seasonally adjusted annual rate of 369,000 in May, the Commerce Department said Monday. The increase was much stronger than the 346,000 analysts polled by Reuters had forecast and was the highest since April 2010.

In addition to the strong monthly rise, revisions to previous months' data added 23,000 to the annual rate of new home sales, pushing March higher to 347,000 and February to 366,000, from the previously reported 332,000 and 358,000, respectively.

We see the May new homes sale report as yet another data point that supports our view that housing is in a moderate recovery phase, and we look for existing strength in multi-family starts to be complemented by firmer home prices nationally and a gradual recovery in single-family starts, Michael Gapen, senior U.S. economist at Barclays Plc, wrote in a note to clients.