U.S. New Home sales surged in a big way - Nomura

Analysts at Nomura noted that new home sales surged by 16.6% in April to an annualized 619k, well above expectations (Nomura: 524k, consensus: 523k) after a revised 531k in March (previously reported as 531k).

Key Quotes:

"This is the highest pace of sales since January 2008 and the largest monthly change since January 1992. We have remained constructive on the housing market, but even this kind of acceleration is above what we expected. We note that the new home sales series tends to be volatile, so it wouldn't be surprising to see some kind of downward revision in the April number with the next report. That said, demand for housing is robust. Solid job growth over the past few years, improving incomes, low mortgage rates, and a lot of pent-up demand continue to drive better housing activity.

The median sales price increased by 9.7% y-o-y to a series high of $321k. Indeed, only 44% of new homes sold in April were under $299,999. Continued acceleration in home prices and less construction of lower-priced homes are factors that could constrain residential investment going forward."