US new home sales shot up to a five-year high in June amid depleting inventories of existing properties on the market.

Sales rose 8.3 per cent to a seasonally adjusted annual rate of 497,000 units, the highest level since May 2008, commerce department data on Wednesday showed. The numbers, which beat expectations of a 481,000 rate, followed a downwardly revised 459,000 in May.

Relatively low interest rates, an improving labour market and rising consumer confidence have encouraged more Americans to buy houses. Falling stocks of existing homes for sale has prompted more homebuyers to turn to new builds.

Economists hope rising demand for new homes will propel residential construction and in turn growth this year, boosting the world’s largest economy.

But some believe the housing recovery may slow in the second half of this year as mortgage interest rates tick higher in anticipation of the US Federal Reserve slowing its bond-buying programme.

“The wrench in the works, however, is the emerging downward trend in mortgage applications in the wake of the surge in rates,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “At the same time, rising finance costs are giving investors pause for thought too, so both key groups of buyers can be expected to be more cautious over the next few months.”

The median selling price of a new home in June was $249,700, up 7.4 per cent from $232,600 the same month a year ago.

The supply of homes at the current sales rate was 3.9 months compared with 4.2 months in May. There were 161,000 new houses on the market at the end of June, up from 159,000 a month earlier.

At the same time, the number of existing homes for sale stood at 2.19m in June, the fewest of any June since 2001.

Sales of new properties, which are tallied when purchase contracts are signed, are considered a more timely measure of the market than sales of previously owned dwellings, which are counted when a sale is final. New-home sales accounted for about 7 per cent of the residential market in 2012.

Homebuilders have grown more confident. The National Association of Home Builders/Wells Fargo index of builder sentiment climbed this month to a seven-year high, data last week showed.

While new home sales are still below the 700,000 pace consistent with a healthy market, they have risen 38 per cent in the past year – the largest annual gain since January 1992.

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