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Home price gains likely to remain strong. Shortage of new homes for sale likely to get larger before getting smaller. More demand than supply of new homes have caused prices to rise.

New home sales jump in May to highest level in five years

 

By Andrew Khouri   June 25, 2013, 8:18 a.m.

New home sales surged more than expected last month, a good sign for a building sector that has an oversized role on the broader economy.

Sales of new single-family homes rose 2.1% from April to a seasonally adjusted annual rate of 476,000, the Commerce Department said Tuesday. That was the highest rate since July 2008 and 29% more than May of last year.

Home values have risen sharply lately as buyers compete for few available homes. That lack of inventory and price growth has builders turning dirt and increasingly confident in the new home market.

That is not only good news for those in construction but also related industries such as lumber, and heating and air conditioning.

New home sales rose from April in all regions except the South, but were up across the nation compared with last year.

The median price for new homes in May was $263,900, down 2.8% from a month earlier.
Supply remains below average. If new homes continued to sell at the current rate there would be a supply of 4.1 months, unchanged since April.

Also on Tuesday, a leading home price index showed strong growth during April in the nation's largest cities. The Standard & Poor’s/Case-Shiller index rose 2.5% from March and 12.1% over the last year.

Because of the time it takes to build new homes, economists Patrick Newport and Stephanie Karol of IHS Global Insight said those sharp gains won't ease soon.

"The shortages are likely to get larger before getting smaller, which means that home price gains in most cities and states are likely to remain strong for some time," they said in an emailed analysis.

 Source: http://www.latimes.com/business/money/la-fi-mo-new-home-sales-20130625,0,1987953.story?track=rss