There's little stopping the U.S. housing recovery. Combined existing and new home sales rose 10% in the past year to 8-year highs in May. First-time buyers jumped off the fence, now accounting for nearly one-third of sales (up 5 ppts from a year ago). Fewer listings have spurred new construction. Home prices are climbing at a 5%-plus clip.
A durable recovery in housing markets will help drive the economic expansion, not just because of its direct impact via residential construction, but because of its effect on consumer spending. Demand for home furnishings, equipment and maintenance (4% of consumer spending) is now running at a 5% clip. In addition, higher home prices are lifting wealth and confidence. Small wonder consumer spending has risen 3.4% in the past year to May, the strongest pace since the previous housing boom was in full swing.
"With the current upswing in U.S. housing still in middle innings, the outlook for consumer spending and the economy looks promising." notes BMO Capital Markets
