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New home sales in the U.S. rebounded by much more than expected in the month of May, according to a report released by the Commerce Department on Monday.

The Commerce Department said new home sales spiked by 6.7 percent to an annual rate of 689,000 in May after plunging by 3.7 percent to a revised rate of 646,000 in April. Economists had expected new home sales to climb by 1.5 percent.

The bigger than expected increase in new home sales was due to a surge in home sales in the South, which shot up by 17.9 percent to a rate of 409,000.

On the other hand, new home sales in the Northeast and West slumped by 10.0 percent and 8.7 percent, respectively, while new home sales in the Midwest were flat.

The report also said the median sales price of new houses sold in May was $313,000, down 1.7 percent from $318,500 in April and down 3.3 percent from $323,600 in the same month a year ago.

The estimate of new houses for sale at the end of May was 299,000, representing 5.2 months of supply at the current sales rate.

Last Wednesday, the National Association of Realtors released a report showing an unexpected decrease in existing home sales in the month of May.

NAR said existing home sales fell by 0.4 percent to an annual rate of 5.43 million in May after plunging by 2.7 percent to a downwardly revised 5.45 million in April.

The drop surprised economists, who had expected existing home sales to climb to an annual rate of 5.52 million from the 5.46 million originally reported for the previous month.