"Great Housing Market Bust is Over"
New home sales increased in March by 23.8% compared to the same month last year, the largest annual increase in new home sales since the month of July 2005, according to data released yesterday by the Census Bureau (see chart above).
As a result of the increased sales activity for new homes at the same time that the supply is at a 39-year low, the inventory measure "months supply of new homes at the current sales rate" fell to the lowest level since December 2006, signalling that the balance between supply and demand of new homes is back to a more normal, pre-crisis level (see graph below).
MP: Friday's new data on new home sales through March point to a housing market that is past the bottom and in a new period of recovery. See Scott Grannis' recent post on existing home sales, where Scott concludes that "The resulting picture becomes quite clear: the great housing market bust is over, and a new growth cycle is underway."