New Home Sales Stronger Than Expected, Now At 7-Year High

New home sales exceeded consensus forecasts, coming in at 546,000 annual units versus expectations of 525,000. Sales increased 2.2 percent month over month, and are now at the highest level since February 2008.

Last month's rate was also revised upward to 534,000 from 517,000. New home sales account for slightly more than 9 percent of the overall housing market.

This follows yesterday strong existing home sales report, which showed existing sales at a 5 1/2 year high, and building permits at an eight-year high. New homes sales rose 87.5 percent in the Northeast, the biggest increase since July 2012. The West region showed a gain of 13.1 percent, while the South and Midwest fell 4.3 percent and 5.7 percent respectively.

The stock of new houses for sale was unchanged at 206,000 last month, but is still at half the levels seen during the previous housing boon. May sales pace represents a 4.5 month supply of houses, a slight tightening from 4.6 months in April.

Initially, home builder stocks rallied on the news, but have since fallen back to trade near the lows on the day.