Economic Outlook- New Home Sales

Today's New Home Sales data reported by the US Dept of Commerce is very encouraging. Economists estimated an annual pace of 337,000, which would have represented a strong drop from the 358,000 rate in February. The data released indicated an annual pace of 356,000, which may demonstrate that the market is stabilizing.

The following graph depicts New Home Sales since 2003, which have been in a downward trend since 2005.


As we indicated in our quarterly newsletter, the stabilization of the housing market is precursory to a recovery in the economy, and consequently, the stock market. While the new home sales category is just one portion of the overall housing market, what we're looking for is overall consumption of inventory which will lead to stabilization in the supply/demand equation and provide support for home prices.