by Tim McLaughlin, Sr. Vice President, Weichert Financial
Demand for new U.S. homes rose more than forecast in April, indicating residential real estate may conribute to economic growth for the first time in seven years.
Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported Thursday in Washington. The median forecast in a Bloomberg News survey of 72 economists was 335,000. Data yesterday showed April sales of previously owned homes rose in every region.
“It’s very clear now that the housing market has turned a corner,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC, who projected sales would increase to a 339,000 pace. “The only question is how strong the rebound is going to be. It bodes well for the broader economy.”
Job growth, improving affordability and record-low interest rates are helping propel sales of both existing and new homes.
The National Association of Realtors announced that the median price of an existing home climbed about 10% to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.
There were substantial improvements in delinquency rates during the first quarter of 2012 according to the National Delinquency Survey. Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Education said that the combined percentage of loans in foreclosure or at least one payment past due was roughly 11%, a drop from last quarter and from last year’s first quarter. In fact, this was the lowest that this measure has been since 2008 – mostly due to a decrease in the rate of loans that were 30 days or more delinquent.
The focus for next week will be a plethora of economic releases, mainly housing and employment data. Equities have taken a big hit in May, and a positive week ahead could be the rebound Equities are looking for. The question is: if Equities do rebound on strong data releases, will Interest Rates take a hit on the rally?