New home sales rose 7.1% in May; Personal income and spending up 0.3%
WASHINGTON -- New home sales shot up 7.1% in May, the Commerce Department reported, indicating that the housing market is gaining momentum again after slowing down the month before.</br></br>The Commerce Department said new homes sold at a seasonally adjusted annual rate of 825,000 in May, nearly reversing the 8.1% decline in April.</br></br>Analysts have been astonished by home buyers' resilience. In its daily commentary about the economy, securities firm Donaldson, Lufkin & Jenrette Inc. told clients that the home-sales report indicates "that the housing sector is strong, although it may have plateaued."</br></br>For months now, analysts have been declaring that housing has hit its peak. Yet it keeps on thriving. Mortgage rates remain favorable, and consumers are definitely in good shape. "What can you say?" said economist Gary Ciminero of Independent Economic Advisory in Providence, R.I. "We're seeing the results of record-high confidence levels, robust employment and good income growth."</br></br>After buying homes, consumers usually turn around and spend more money on appliances, furniture and the like, continuing to propel economic growth.