New home sales up 8.3% in June

• Median price of a new home%3A %24249%2C700
• Strength in building permits a good sign for sales trends
• Economists had forecast an annual sales rate of 484%2C000 for June

New home sales in June hit their highest level in more than five years, a sign of the housing market's strength in the face of recent increases in mortgage rates.

The Commerce Department said sales rose 8.3% to a seasonally adjusted annual rate of 497,000, the best pace since May 2008. May's sales rate was also revised lower to 459,000.

"The jump in new home sales is great news, but whether it was due to growing demand or fears of even higher mortgage rates is not clear," said Joel Naroff, chief economist of Naroff Economic Advisors.

It's too early to say that higher rates will not slow the housing market, he said.

People who had been thinking about buying a home may have moved faster as rates rose in June, boosting last month's sales as they tried to beat further rate increases. Now rates appear to have stabilized, and that may keep some potential buyers from making a purchase, leading to softer demand in the future, Naroff said.

The supply of new homes on the market remains tight. At last month's sales pace, the inventory would sell out in 3.9 months. A six-month supply is considered normal.

Tight supplies are contributing to higher prices, one reason that U.S. homebuilders are growing increasingly confident about their business.

The median sales price of new homes sold last month was $249,700, up 7.4% from a year ago.

The National Association of Home Builders/Wells Fargo builder sentiment index jumped to 57 this month from 51 in June. That was the third-consecutive monthly gain.

A reading above 50 indicates more builders view sales conditions as good, rather than poor.

Meanwhile, existing home sales fell by about 1% in June to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors reported on Monday. The annualized sales pace for January through June is about 5 million, the strongest first half since 2007.

The average fixed rate on a typical 30-year mortgage was 4.58% for the week ended July 19, down from 4.68% the week before, the Mortgage Bankers Association said Wednesday. Applications for mortgages to buy homes decreased.2% from a week earlier, the MBA said.

Freddie Mac will release its weekly mortgage rate survey on Thursday.