Housing is emerging as a positive surprise for the 2016 economy. New home sales burst to their best strength of the cycle during the Spring, coming in at a much higher-than-expected 592,000 annualized rate in June following a 572,000 rate in both May and April (both revised). To see the strength by comparison, the rate in June last year was 25 percent lower at 472,000.
This is 3.5 percent above the revised May rate of 572,000 and is 25.4 percent above the June 2015 estimate of 472,000.
Trend strength appears across regions led by the Midwest, up 44 percent year-on-year, with the South at the rear but still up 21 percent. Monthly data show slowing in the Northeast, where however sales totals are very small, and solid strength in the West which is a key region for home builders.
The gain in sales did not come at the expense of prices, at least in June. The median jumped 6.2 percent to $306,700 which, however, is only up 6.1 percent from a year ago. The mismatch between prices and greater strength in sales perhaps hints at price traction to come, in contrast to existing homes where prices are showing less strength.
One negative is supply in the new home market which looks to become an increasing problem. New homes for sale inched only 3,000 higher in the month to 244,000 with the supply at the current sales rate falling to 4.9 months from 5.1 months and compared against 5.5 months a year ago.
Housing had a very good Spring and looks to contribute solidly to overall economic growth.