The Commerce Department said new home sales rose 2.1% last month to the highest rate in about five years.
“Analysts say the housing recovery is looking more sustainable and should continue to boost economic growth this year, offsetting some drag from higher taxes and federal spending cuts,” the Associated Press reports.
In other data Tuesday, the S&P/Case-Shiller index of 20 U.S. cities rose 12.1% in April from the previous year.
“The recovery is definitely broad based,” said David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.
“Strengthening in home prices is a plus for growth through various channels, including increased consumer spending because of wealth and confidence effects, increased incentive to buy before prices go up some more, and increased incentive to lend because of less chance of mortgages turning delinquent,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics, in a MarketWatch report.
Separately, the Federal Housing Finance Agency estimated U.S. home prices climbed 7.4% year-over-year in April. The index is 11.7% below its April 2007 peak and is at roughly the same level as January 2005.
SPDR S&P Homebuilders ETF is trailing the S&P 500 year to date after a sharp pullback from its mid-May high. The builder ETF is off 10.3% for the trailing month, more than doubling the loss of the S&P 500, according to Morningstar data.
SPDR S&P Homebuilders ETF
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