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New Home Sales: Strong Gains

April 25, 2017

Bottom Line: New home sales rose more than expected in March to a seasonally adjusted annual pace of 621k, nearly reaching the post-crisis highs seen last July. Sales over the last three months have averaged 598K and are 2.9% above the 6 month average of 581K. The months supply dropped against as sales rose more than inventories. New home prices rose sharply again after two months of somewhat anomalous lower prices. After last week's strong existing home sales report, this new home sales data (based on contract signings rather than closings like existing home sales reports) reveals more potential strength going forward.

New Home Sales ROSE by 5.8% to 621k, after the prior month was revised lower to 587k. This compared with market expectations for a decline to 584k, from the unrevised February level of 592k.

Sales are now 15.6% ABOVE their year ago level, -- but they are still 55.3% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 1.1% to 268k. Inventories are now 9.8% ABOVE their year ago level but still 53.1% BELOW their July 2006 peak level.

Combined with the increase in sales, the Months' Supply dropped to 5.2 months from 5.4 months. This is modestly BELOW a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009.

Home Prices ROSE with median prices 1.2% ABOVE their year ago level and with average prices 5.6% ABOVE their year ago level.

Article by Contingent Macro Advisors