Michael Gregory, Deputy Chief Economist at BMO Capital Markets, explains that the US housing demand continues to strengthen, bolstered by income growth (thanks to gains in both jobs and wages) along with still-historically attractive affordability (thanks to relatively low mortgage rates).
“The availability of credit continues to improve as banks ease mortgage lending standards. It also helps that consumers have not been this confident since the millennium year. However, new home sales likely suffered a setback in April, owing to extreme levels of precipitation (the most for any April in 60 years and the second most in 123 years). Sales might do well just to stay above the 600,000 mark. The homebuilders’ sales survey showed that activity ebbed in April only to rebound in May (now hovering around the best levels in a dozen years).”