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Stronger New Home Sales Are a Good Sign

New home sales showed strength in April, rising 16.6 percent to 619,000, according to new data out from the Commerce Department this morning. It was the biggest monthly increase since 1992, and the highest seasonally adjusted annual rate since the start of 2008. The increase was well above analyst expectations.

Three of the four regions of the country saw sizable percentage gains in April, especially the Northeast. The South and West were also up; the Midwest was down a bit. By hard numbers, the South saw the biggest jump, 352,000 new home sales on an annualized basis from 304,000 in March.

The sales partially reflect renewed consumer confidence, said Bob Hughes, senior research fellow at the American Institute for Economic Research. Americans wouldn’t be buying new homes if they didn’t feel like they could commit to a mortgage, Hughes said.

“It also fits with the stronger retail sales report, and the strength in the labor market,” Hughes said. AIER has reported weakness in the economy in recent months, but combined with the most recent data we’re getting, “it would suggest that maybe this is turning out to be another soft patch, and a slightly receding risk of recession,” Hughes said.

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2 Comments Post a comment
  1. Katy Delay #

    “Americans wouldn’t be buying new homes if they didn’t feel like they could commit to a mortgage, Hughes said.” Isn’t it possible that some of these new homes are being built by contractors for flippers? The fever is back, from what I can see. For example, in a little valley in Utah with which we are very familiar, the new building has almost reached the same pace as back in the mid-2000’s, and yet there are too many older homes for sale in the area and those prices are depressed, probably because of over-supply. Frankly, I’m worried this is another housing bubble.


    May 24, 2016
  2. Aaron Nathans, Communications & Public Affairs Manager #

    Thanks, Katy.


    May 25, 2016

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