Economists had forecast a gain of just 1 percent and an annual pace of 667,000, up from 646,000 in April. The April figure was revised down from 662,000.
The biggest boost came in the South, America’s largest region. Sales there rose 17.9 percent, hitting an annualized pace of 409,000, the highest in 11 years.
Home buyers found cheaper homes in May, with the median sales price falling by 3.3 percent compared with a year ago. That fall in home prices came despite complaints from home builders that tariffs were driving up their costs.
Residential construction is strong. The number of homes sold but not yet started rose to a six-month high, indicating that housing will continue to contribute to economic growth in the months ahead.
Demand for housing is likely getting a boost from the strong labor market and lower taxes. Higher interest rates, however, are expected to make buying a home more expensive.
Sales were unchanged in the Midwest, while sales in the West and the Northeast declined.
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