New Home Sales Show Best Conditions Of The Year

New home sales have been strong and home builders are reporting more of the same, in fact the best conditions of the year. The housing market index is up a very sharp 6 points this month to 65 for the best reading since October last year. The present sales component is up 6 points to 71, a level last matched in October last year, while future sales are up 5 points and are also at 71 which for this component is the best showing since all the way back in October 2005. The reading for traffic, up 4 points to 48, was last matched in November last year and last exceeded, once again, in October 2005.

At an enormously strong composite score of 82, strength is concentrated in the West which is a focused region for home builders. The South, which is the largest region for home builders, follows at 68. The Midwest is at 56 with the Northeast, which is by far the smallest region for home builders, lagging badly at 43.

Aside from the Northeast, there's nothing at all lagging about this report, one that points to an accelerating second-half contribution from housing and also perhaps to unexpected strength for tomorrow's housing starts & permits data which, in contrast to sales data for new homes, have been no better than mixed.

Recent History Of This Indicator:
The new home sector is one of this year's bright spots in the economy with the housing market index one of the bright spots on the calendar. The index rose 1 point in August to 60, well over breakeven 50 which is the divide between home builder optimism and pessimism. Components for both current sales and expectations of future sales have been posting 60 scores all year, offset only in part by weakness in traffic which is being held down by this cycle's lack of first-time buyers. The two most important regions for new home sales, the West and the South, have been leading this report