Implications: New home sales should be the last piece of the housing puzzle to recover, and they now look to be on the mend. New home sales beat consensus expectations and are now up 9.9% from a year ago. This is great news considering banks can now move forward with foreclosures more quickly, which is bringing a large inventory of bargain-priced existing homes on the market. The road ahead looks better than it has looked in years. The upward trend in home sales is only one piece of good news for builders. Another is that the total inventory of new homes is near rock bottom levels (see lower chart to right). Notably, however, the inventory of new homes where the builder has yet to break ground continues to climb, showing builders are getting ready for what they believe will be more buyers. We think they’re right. In fact, a lack of inventories is probably holding back sales. The other piece of good news for builders is that new home prices are climbing, with the median price of a new home up 4.9% from a year ago and average prices up 5.1%. In other news on home prices, the FHFA index, a measure for homes financed by conforming mortgages, jumped 1.8% in March, the largest monthly gain since the start of the series back to 1991. Prices are now up 2.7% from a year ago, the largest gain since November 2006.
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