With more good news on the housing market Tuesday, some analysts say recession-scared Americans should start considering dipping their toes back into the market.
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New home sales surged to an eight-year high last month as they rose the most in 24 years, the Commerce Department reported. New, single-family home sales rose to a seasonally-adjusted rate of 619,000, a 16.6% spike from the month prior. Further, new home sales figures for the prior three months were revised up.
Meanwhile, the median home price rose 9.7% from a year ago to a record high of $321,000, while the average price for a new home rose to $379,000, up 13.5% from April 2015.
The data follow last Friday’s report from the National Association of Realtors, which reported sales of existing single-family homes rose 1.7% in April to an annualized rate of 5.45 million units. That was above Wall Street estimates for a rise to 5.40 million units.
IHS U.S. Economist Kristin Reynolds said based on the data, the spring selling season looks bright as the market for new homes continues to regain momentum.
“The average price grew faster than the median suggesting more activity at the higher price points. Buyers trading up will eventually list their less-expensive homes for sale,” Reynolds said in a note.
She added that with continued improvement in the labor market and continued upward momentum in wage inflation, combined with low rates to borrow cash, the fundamentals for the housing market remain strong, and IHS expects new home sales to advance through the remainder of 2016.
For that reason, Jared Levy, senior strategist at ProfitableTrading.com, told FOX Business Network’s Neil Cavuto that he’s betting on the housing market over equity markets.
”There’s not a lot of crazy lending going on, a lot of the deals we’re seeing are cash either by Americans who have made money on their real estate, or foreign investors or hedge funds,” he said. “I think [the market] stays more stable moving forward through the end of the year.”
Levy added that signs of strength in large, metropolitan areas like New York, San Francisco and Dallas should show still-scared Americans that the post-recession housing market is a safe place to invest.
“The lesson here is buy real estate, don’t be scared of it,” he said. “Buy Lowe’s and Home Depot because people that are living in their homes are fixing them up. They’re either re-selling them, or they’re staying there because they can’t afford to buy.”
He pointed to Millennials who have traditionally opted to stay away from investing in a mortgage as they place a higher preference on renting versus buying – warning that if they don’t step in, other buyers will.
“Perhaps this is a PSA for Millennials in that foreign investors realize they can come in, put their money in American real estate, it’s a safe place,” he said. “That homeownership level tells us that the average American is still scared. But hedge funds and foreign investors – they’re buying.”