New home sales have been trending up for the last three years and the National Association of Home Builders (NAHB) expects that to continue on into next year as job gains drive up demand for housing, according to the NAHB's biweekly survey, Eye of the Economy, on Wednesday.
Sales of new single-family homes rose 18 percent year-over-year in June at a seasonally adjusted annual rate of 482,000 compared to June 2014's pace of 408,000, according to the survey. This yearly increase occurred even with a month-over-month decline from May to June of 517,000 down to 482,000, a drop of 6.8 percent.
"Rising builder confidence, housing starts and low interest rates all point to continuing recovery in the housing sector, even as industry headwinds, including access to lots and labor, will produce bumps along the road," NAHB Chief Economist David Crowe wrote.
Existing home sales also showed the same trend – month-over-month decline despite climbing year-over-year, according to the June National Association of Realtors Pending Home Sales Index. The index showed an increase of 8.2 percent from a year earlier, the 10th straight year of year-over-year gains, despite dropping down by 1.8 percent from the previous month.
The increasing number of households who both rent or own has been growing, which is positive news for the housing market, according to Crowe. According to the Census Bureau's Housing Vacancy Survey, the total number of households in Q2 was approximately 117.3 million, a gain of 1.6 million households from the same quarter a year earlier. Other factors that point to continuing recovery in housing are rising builder confidence, housing starts, and low interest rates even as industry headwinds (such as access to lots and labor) attempt to slow things down a bit, Crow said.
A stronger economy will also help the housing market, according to Crowe; the advance estimate from the Bureau of Economic Analysis last week showed real GDP grew at a rate of 2.3 percent, up from the first quarter's paltry 0.6 percent.
"NAHB expects growth for the third and fourth quarters of GDP to be stronger than the second quarter, which should further promote job creation, household formations, and housing demand," Crowe said.