Rising new home sales point to a strengthening U.S. housing market

From the Baton Rouge Business Report:

Real estate has historically helped bring the United States out of recessions: As interest rates dropped, home sales increased and construction jobs jumped. But as The Los Angeles Times reports, perhaps one of the most significant repercussions of the industry's collapse during the most recent recession has been that housing hasn't been available to play its traditional role in the recovery. That appears to be changing, some analysts say. Sales of new single-family houses in May rose 7.6% compared with April and 19.8% from May 2011, the Commerce Department reported Monday. The seasonally adjusted annual rate of sales was 369,000 last month, the highest level since April 2010, when a federal tax incentive for buyers that had been juicing the market expired, sending sales and prices into a renewed decline. "This is the first time I have heard any kind of pulse in the home building business in the last five years, and I think it is legitimate," says Stuart Hoffman, chief economist for PNC Financial Services Group. "The housing market will be a source of strength to the economy for the first time in years." Last year, new home sales were so weak, they set a record for the most dismal performance on the books. Nationwide, sales have now rebounded 35% since hitting a low in February 2011. The widely read economics blog Calculated Risk has argued for months that a recovery in housing is under way. Nonetheless, new home sales statistics are historically unreliable, and many economists caution against placing too much weight on one month's report. Read the full story here.