New Home Sales Skyrocket
New homes are selling at a record pace as the housing market jumps to the tune of a boom economy. Sales of new homes edged up again in May, reported the Commerce Department last week, reaching a seasonally adjusted rate of 890,000, the highest total since the government began tracking these figures 35 years ago. May, 1998 was the ninth consecutive month above 800,000, the longest such streak in 21 years.

Demand for new housing has been strong over the past 12 months. Some real estate experts are calling this the strongest new home market since the 1970s.

What's driving the demand? Low interest rates hovering around 7 percent for a 30-year fixed mortgage are certainly helping to make homes affordable to more buyers, plus enabling buyers to step up to larger homes with more features. High levels of employment, rising incomes, and pent-up buyer demand also contribute to higher sales--all good news for the housing industry and mortgage finance sectors of the economy.

Fortunately for consumers, prices of new homes are rising but not astronomically. House prices rose 5.8 percent nationally in the past year, according to housing industry reports.