New home sales surge
Sales of new homes rose at the fastest monthly pace since January 1992 lifting the annualized pace to 504,000 and its strongest since May 2008. The May level exceeded the highest among forecasters of 462,000. Sales were especially strong in the nation’s two largest regions with the West seeing the highest level of activity since February 2013. In the South sales of 266,000 were the most since May 2008. Across the country median prices rose by 6.9% to $282,000. The brisk pace of sales reduced supply. At the current pace of sales it would take 4.5 months to sell all new homes available for sale, while at the April pace it would have taken 5.3 months. The supply metric is the lowest since June 2013.
Sales surged in the nation’s two largest regions
Consumer confidence gains
Equity prices have turned positive following the leap in new home sales and a favorable view of the economy among consumers. The Conference Board said that its headline confidence index rose in June by the most since March to 85.2 from a downwardly revised May reading of 82.2. The headline reading is the strongest since January 2008. Both current and expectations gauges contributed to the advance, but the bigger gain came from how consumers feel about their current situation. In the following chart, which breaks out the two series, the current situation index advanced to 85.08 and the highest since March 2008.
Current situation index best since April 2008