New home sales: Trend says strong

|By:, SA News Editor

New home sales rose 2.9% in May to a seasonally-adjusted annual rate of 610K. Brian Wesbury notes previous months were revised higher as well, and sales were up 8.9% from May 2016's pace.

Inventory did edge upward, but it's still just 5.3 months of supply - that's well less than the 7.3 months of supply at 2006's market top. Further, 20% of that inventory is homes where construction has yet to begin - a more normal share would be 15%.

Citing continued job gains and the related upward pressure on wages, continued thawing in underwriting, and a depressed homeownership rate, Wesbury and team remain positive on housing's outlook.

The ITB is higher by 0.45% this session, slightly outpacing the S&P 500's advance. The more retail-oriented XHB is down 0.3%.

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