Rising wages, a tighter labor market, the wealth effect from tremendous stock and bond market gains, Millennials turning mid-30’s, pent-up home-shoppers coming out after a terrible winter – these are all the ingredients for a ballistic housing market, not unlike the one I had guessed we would see this spring (see my February story at Fortune here).
Last week, we got data on new single-family home starts that was just incredible – a 22% gain over the prior year. This week, we heard this about homes under contract as of April (via Barclays):
Pending home sales rose 3.4% m/m in April, coming in a bit above our forecast (3.0%) and well above consensus expectations (0.9%) for only a modest rise. The strength in April pending sales was broad-based, with gains led by the Northeast (10.1%) and Midwest (5.0%). Sales activity in these regions was hard hit by adverse weather in Q1 and the strength in April pending sales suggests a boost to regional existing home sales in the coming months. Gains in the Midwest (5.0%) and South (2.3%) were more modest, though these regions did not recently experience declining sales. The April data leave total pending sales up 13.4% y/y and, on balance, are supportive of our expectation of a solid Q2 rebound in residential investment.
As you can see, we’re back above pre-crisis levels. Residential housing has indeed gone ballistic this spring:
Update: US pending home sales post solid advance in April
Barclays – May 28th 2015