US Housing Market Shows Resilience with Surge in Sales and Mortgage Applications

New home sales in the US surged 20% year-on-year in May, defying expectations amid higher interest rates. The jump may be attributed to lower house prices, which could be good news for the Federal Reserve's fight against inflation. Falling home prices could help reduce overall inflation, giving the Fed room to ease off on its aggressive interest rate hikes. However, if the increase in sales is driven by consumer confidence and increased spending, it could signal further inflationary pressures and suggest the Fed's job is not yet done.