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New Home Sales Pick Up Smartly But Stocks Still Sag

 June 25, 2012 10:43 AM

(By Kevin Donovan) Something to cheer for a change.  The Department of Commerce said sales of new homes in the U.S. rose a brisk 7.6% in May to an annual rate of 369,000 vs. 343,000 in April, well ahead of expectations.  The sales pace was the highest in two years.  Stocks bounced off their lows on the news but the selloff has resumed.

Don't fear a bubble.  The median price paid for new homes fell 0.6% to $234,500 in May from April.  And the sales pace is still far below the pre-recession peak.

The increased sales pace was far from widespread. Sales were strongest in the Northeast and the South.  Outright declines were tallied in the West and Midwest.

The news doesn't change our view that the Fed will be inclined to ease monetary conditions in the weeks ahead.

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