New U.S. single-family home sales unexpectedly surged in July, reaching their highest level in nearly nine years amid robust demand, brightening the housing market outlook and bolstering views that economic growth will pick up in the third quarter.
As Reuters reports, housing market strength should offset some of the drag from manufacturing, with other data today showing production at factories remaining constrained by weak orders.
“A very rosy picture is beginning to emerge on the housing market, pointing to sustained buoyancy in the sector’s recovery, which remains one of the few bright spots for the U.S. economy,” says Millan Mulraine, deputy chief economist at TD Securities in New York.
The Commerce Department says new home sales jumped 12.4% to a seasonally adjusted annual rate of 654,000 units last month, the highest level since October 2007. It was the fifth straight monthly gain in new home sales.
July’s increase, however, likely exaggerates housing market strength as it has not been matched by robust housing starts. Still, sales were up 31.3% from a year ago.
Economists had forecast single-family home sales, which account for about 9.6% of overall home sales, slipping to a rate of 580,000 units last month. July’s surprise increase pushed new home sales well above their second-quarter average, pointing to sustained momentum in the market for new homes.
