US new home sales beat forecasts in May

New home sales rose by much more than expected last month, but the strength was focused in only some parts of the country and prices fell back.

According to the Department of Commerce, new home sales increased by 10.7% month-on-month to reach an annualised pace of 696,000.

Economists had penciled-in a sales clip of 595,000.

Nevertheless, the rise was concentrated solely in the South and West of the US.

The inventory of homes available for sale meanwhile dropped by 7.2% on the month to 7.7 months' worth of sales.

Median sales prices for new homes slipped from $454,700 in April to $449,000 for May, while the average price of a new home declined from $569,500 to $511,400.