New-Home Sales Rise 2.1% in May; Case-Shiller Index Jumps
WASHINGTON—Sales of new homes rose to the highest level in nearly five years in May, suggesting the housing industry will continue to power the U.S. recovery.
This article originally appeared in: The Wall Street Journal
Authors: Jonathan House, Josh Mitchell and Tess Stynes
Sales of new homes rose to the highest level in nearly five years in May, suggesting the housing industry will continue to power the U.S. recovery. Dr. Robert J. Shiller, Yale University professor and Case-Shiller co-founder, joins MoneyBeat.
Sales rose 2.1% in May to a seasonally adjusted rate of 476,000 new homes, the Commerce Department said Tuesday. That was the highest level since July 2008, and above the 462,000 forecast by a Dow Jones Newswires survey of economists.
Separately, Standard & Poor’s reported that existing home prices in 20 U.S. metropolitan areas were 12.1% higher in April than a year earlier, the highest such gain since the Standard & Poor’s and Case-Shiller have been tracking the data. The Case-Shiller index of home prices in 10 major metropolitan areas rose 1.8% in April from March.
A strong housing market sends positive ripple effects throughout the U.S. economy by driving demand for construction materials, creating jobs and bolstering consumer confidence.
But David Blitzer, chairman of S&P’s index committee, warned that “last week’s comments from the Fed and the resulting sharp increase in Treasury yields sparked fears that rising mortgage rates will damage the housing rebound.”
Still, Mr. Blitzer predicted the housing market recovery would continue, since banks’ credit quality standards have been more important than the level of mortgage rates in the housing cycle. He also noted that recent data indicate banks are easing credit restrictions.
The Commerce Department said the median price for new homes sold in May eased slightly to $263,900 in May from $272,600 April. Economists had expected prices to moderate somewhat after rapid increases in previous months. The stock of new homes for sale at the end of May was 161,000, the highest level since August 2011, and representing around 4.1 months of supply.
Last week, the National Association of Realtors said that sales of previously owned homes rose 4.2% to 5.2 million in May, their highest level since 2009, while median prices surged 15% on the year. The data prompted the real-estate trade group to call for a rapid increase in home building to temper the rapid rise in prices.
S&P also said Tuesday that average U.S. home prices in April returned to their early 2004 levels, but still remain 26% to 27% below their peaks in June and July of 2006.
On a year-over-year basis, all 20 cities that Case-Shiller tracks have recorded home-price growth for all least four straight months. During April, San Francisco had the biggest increase at 24%.
Month-to-month, 19 cities showed improvement. Detroit was the exception, with home prices remaining flat.
Markets that took the brunt of the housing bust have been among those with the strongest growth lately. During April, Phoenix and Las Vegas both saw growth of price gains of roughly 22% from a year earlier.
- New-home sales jump in April May 26, 2015
- NNA clears up questions about the new Signing Professionals Workgroup standards January 10, 2014
- What to Expect from Housing This Year January 7, 2014
- What’s Next for the Housing Market? January 3, 2014
- CFPB Starts to Flex Its Muscles December 31, 2013