New home sales surge 18.6%, topping forecasts

New home sales last month blew past forecasts to their strongest pace in six years, the Census Bureau reported Tuesday.

Sales of new homes reached a seasonally adjusted annual rate of 504,000, up 18.6% from April's revised rate, the Census Bureau said. That's the highest rate since May 2008.

Economists had forecast an annual pace of 440,000, according to the median estimate in Action Economics' survey.

Through May, new home sales are roughly flat with last year — up 0.8%.

Prices, in contrast, are up sharply. The median sales price of new homes sold in May was $282,000, almost 7% above a year earlier.

Sales showed wide differences by region. Census reported new home sales in the Northeast rose nearly 55% from April, 34% in the West, 14% in the South and 1.4% in the Midwest.

The new home sales report was the second piece of housing data in two days that exceeded expectations. The National Association of Realtors reported Monday that sales of existing homes last month rose 4.9% from April.

That was the strongest monthly gain in almost three years, although sales remain weaker than a year ago. Through May, sales of previously owned homes are down 8.2% from the first five months of last year.

The market also continues to be difficult for buyers with modest financial resources, such as first-time buyers. Their share of existing home sales fell to 27% in May, down 2 percentage points from April and from April 2013.