US posts strong housing data – Nomura

Research Team at Nomura notes that the US new single home sales increased stronger than expected in February, up 6.1% m-o-m, pushing up the annualized pace to 592k (Nomura: +0.5% to 565k, Consensus: +1.6% to 564k).

Key Quotes

“The prior months from November 2016 and January 2017 were all revised upwards. The strong increase in new home sales appears consistent with single family building permits that increased strongly from January to February and elevated readings of NAHB sales of single family homes index, pointing to healthy housing market activity.”

“The supply of new homes for sale increased slightly, but the months supply indicator declined to 5.4 from 5.6 as the sales increased strongly. In addition, it appears that the supply of affordable single home for sale declined. The median new home price fell 4.9% y-o-y but mean price increased strongly by 11.7% y-oy, pointing to worsening affordability of newly built single home for sale.”

“Q1 GDP tracking update: The stronger-than-expected increase in February and the upward revisions in the past months point to stronger residential investment in Q1. We are raising our Q1 GDP tracking estimate by 0.1pp to 1.3% from 1.2%.”