Last week, the National Association of Realtors reported a healthy gain in sales of existing single-family homes for March. Today, the Commerce Department reported that sales of new single-family homes also rose in March. Counterbalancing the upbeat housing news was a report from the Conference Board showing that consumer confidence ticked down slightly in April.
The housing market has been on a solid uptrend since the housing boom of the mid-2000s ended with the Great Recession of 2008–9. Following the Great Recession, housing construction and home sales have been rising from multi-decade lows. The data on new-home sales for March show a 5.8 percent gain compared to February, to a 621,000 seasonally adjusted annual rate. Three of the four regions posted gains, led by a 25.8 percent surge in the Northeast, followed by a 16.7 percent jump in the West and a 1.6 percent increase in the South. The Midwest posted a 4.5 percent drop. All four regions have gains from a year ago.
The supply of new homes for sale increased 1.1 percent in March, putting the supply at 5.2 months’, the lowest since last November. While that figure is above the months’ supply of existing single-family homes, it is still relatively low by historical measures. The combination of tight supply, strong consumer fundamentals, and low interest rates is helping drive home prices higher. The Standard & Poor’s Case-Shiller Home Price Index rose 0.7 percent in February and is up 5.9 percent from a year ago.
Slightly offsetting the positive news on housing was a report from the Conference Board showing that consumer confidence fell slightly in April. The Consumer Confidence Index fell to 120.3 from 124.9 in March. The two components also declined in April, with the Present Situation Index falling to 140.6 from 143.9 while the Expectations Index dropped to 106.7 from 112.3. In a longer-term historical context, consumer confidence remains at a relatively high level.
Data today are still consistent with a positive outlook for the economy. The data are also in line with the AIER Leaders index, which registered a very solid 83 in March, the highest level in 2.5 years.