The Fiscal Times advises that the “the housing market is about to perk up.” One of the reasons for the optimistic outlook, we’re told, is the recent rebound in sales. This upbeat forecast is due for a stress test this week with the monthly releases on sales of existing homes (scheduled for later today at 10am eastern) and tomorrow’s report on new home sales. The stakes are higher than usual in the wake of recent economic reports that point to a sharp slowdown in US growth in the first quarter.
The good news is that the growth rate for house sales has been rising lately. The acceleration in the year-over-year increase for purchases of newly built homes in February is particularly noteworthy: sales rose nearly 25% vs. the year-earlier level, the strongest pace since October 2013.
Existing sales, which represents a much bigger piece of the market, are growing too but at a much lower rate: 4.7% for the year through February. But here too the trend is picking up, albeit modestly. Nonetheless, existing sales in February rose at the best rate for the annual comparison since Oct. 2013.
The main question for today’s release: Will the trend continue to strengthen? Yes, according to Econoday.com’s consensus forecast, which projects a rise in existing sales to 5.045 million (annualized pace) for March vs. 4.88 million in the previous month. The prediction translates into an expected 7.3% year-over-year increase—a healthy improvement over February’s 4.7% annual gain.
Tomorrow’s report on new home sales for March is expected to cool a bit, with transactions dipping slightly, according to Econoday.com. But the monthly forecast still translates into a faster rate of year-over-year growth because of year-earlier weakness.
Questions about the economy’s strength will linger even if the sales numbers match the predictions. But assuming that the projections are right, this week’s housing data won’t offer the economy’s bears any new statistical ammunition for downsizing expectations.