Sales of new houses rose 7.3 percent, to 323,000 annual pace, the highest level in 2011. Of course, this comes on the heels of a record low just two months ago.
New home sales statistics are quoted on an annual basis. In other words, if April’s new home sales numbers were what the new home sales numbers would be for every month of the year, how many new homes would be sold. So, the 323,000 new homes sold number means that there would be 323,000 new homes sold for the year.
There are two important things about this latest economic data and how it will affect investors and the economy. First, the number is slightly higher than what economists were expecting. Any time a number surprises to the upside, that is good news, because it means that things were actually better than everyone thought. Second, while the number is higher, it is still very weak, meaning that IF the housing market is recovering, it is doing so very meekly.
The big problem for new home sales is that there are so many existing homes for sale on the market today. Foreclosures and distressed owners continue to flood the housing market, and a weak and inconsistent lending environment has even willing buyers unable to buy. Until the lending market gets better, housing won’t get much better, and the economy will be trying to pull an anchor up the hill.
Too bad Congress is too busy playing politics to take action.