May new home sales were down 2.1% m/m to an annualized 319,000 from a revised 326,000 the month before (previously 323,000). While the report showed a drop in sales, it was much better than the decline to 310,000 that consensus had expected. The months’ supply of homes on the market fell to 6.2 from 6.3 months in April (previously 6.5), and near the average months’ supply historically, indicating that excess supply of new homes is being unwound. The median price rose 2.6% m/m to $222,600 in May, though is still down 3.4% y/y. New home sales are up 13.5% from the post-tax-credit levels seen last May. The Northeast explained most of the drop, down 26.7% m/m, while the West was down 3.5%. Only the South saw gains, up 2.4% m/m in May. While the report is much better than expected, it adds to other weak readings for the month that point to a painfully slow recovery after the tax-credit boost ended last year.