Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  New Single-Family Home Sales Increased 2.2% in May
Posted Under: Data Watch • Home Sales • Housing
Supporting Image for Blog Post

 
Implications: Excellent report out of the housing market today as purchases of new homes rose to the fastest pace in seven years, signaling that buyers are once again on the hunt. Sales of new homes rose 2.2% in May, exceeding even the most optimistic forecasts, and are up 19.5% from a year ago. This is one reason we think the Federal Reserve will move forward with raising rates by September. In fact, all the talk about the Fed raising rates is probably getting some buyers into the market sooner, thinking they can avoid paying higher mortgage rates in the future. Meanwhile, today's data is very good news for homebuilding activity in the year ahead. The months' supply of new homes fell to 4.5 in May from 4.6 in April as sales picked up but inventories remained unchanged. And although the raw inventory of unsold new homes is up in the past year, all of the increase is due to homes where construction hasn't even been started. The number of completed homes sitting unsold is unchanged from a year ago, and still at very low levels, while the number of unsold new homes still under construction is down from a year ago. As a result, builders have plenty of room to increase both construction and inventories. However, sales still remain depressed relative to history. We think there are a few reasons for this. First, a larger share of the population is renting. Second, buyers have shifted slightly from single-family homes, which are counted in the new home sales data, to multi-family homes (think condos in cities), which are not counted in this report. Third, although we may be starting to see a thaw, financing is still more difficult than it has been in the past. Each of these is beginning to change. Recently, single-family housing starts have showed some signs of picking up relative to multi-family starts, suggesting builders (the quintessential entrepreneur) see a larger appetite for homeownership and single-family home purchases. In other housing news this morning, the FHFA index, which measures prices for homes financed with conforming mortgages, increased 0.3% in April and was up 5.3% from a year ago. In the twelve months ending in April 2014 and April 2013, the index was up 6.0% and 7.2%, respectively. In other words, while home prices continue to rise, they're doing so at a slower rate as a more robust pace of home building brings supply closer in-line with demand. Expect more of the same in the year ahead.

Click here for PDF version
Posted on Tuesday, June 23, 2015 @ 11:25 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
New Orders for Durable Goods Declined 1.8% in May
M2 and C&I Loans
Stocks Are Still Cheap
Existing Home Sales Increased 5.1% in May
The Consumer Price Index Increased 0.4% in May
Fed Talks Hawkish, Acts Dovish
Greece is Detroit, Not Lehman
Housing Starts Declined 11.1% in May
Industrial Production Declined 0.2% in May
Fed Will Kick The Can, But Shouldn't
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.