US Housing Outlook Brighter The Street Thought
New US single-family home sales rose more than expected in November and consumer sentiment is near at 12-year highs, strengthening the view that the economy will gain more momentum in Y 2017.
President Elect Donald Trump’s plan to cut taxes and increase infrastructure spending is expected to boost economic growth, though it already has sparked a surge in mortgage rates that could hurt the housing market in the long term.
Home buyers are confident in their futures and this means the outlook is likely to be brighter next year than the Street analysts thought.
Friday, the US Commerce Department said new home sales increased 5.2% to a seasonally adjusted annual rate of 592,000 units last month. That was the 2nd highest pace since Y 2007.
Economists had forecast single-family home sales, which account for about 9.5% of overall home sales, rising 2.1% to a 575,000-unit rate last month.
Sales rose 16.5% from a year ago, boosted by a 43.8% jump in the Midwest to a 9-year high. Sales surged 7.7% in the West, their highest mark since January 2008, but fell 3.1% in the South, and were unchanged in the Northeast.
The University of Michigan said its consumer sentiment index (MSI) edged up to a reading of 98.2 from 98 earlier this month. That was the highest reading since January 2004.
The University of Michigan said a record 18% of respondents “spontaneously mentioned the expected favorable impact of Trump’s policies on the economy.” Consumers anticipated that a stronger economy would create more jobs, with the share expecting higher income rising to a 1-year high.
Despite the rise in sales last month, the inventory of new homes on the market increased 1.6% to 250,000 units, the highest level since September 2009. The supply of new houses for sale remains about 50% of what it was at the peak of the housing market boom in 2005-2007
The inventory rise, if sustained, could slow the pace of house price increases.
At November’s sales pace it would take 5.1 months to clear the supply of houses on the market, down from 5.2 months in October. A 6-month supply is viewed as a healthy balance between supply and demand.
Merry Christmas, Happy Hanukkah and Good Wished for Success in Y 2017