US: Strength in home sales likely has considerable room to run – Wells Fargo

Data released on Friday showed New Homes Sales jumped 13.8% to a 776K (annual). Analysts at Wells Fargo, look for new home sales to trend higher this year, providing a lift to producers of building materials, furniture and home furnishings, as well as all the service providers tied to housing.

Key Quotes: 

“The broad based strength in new home sales reflects a shift in consumer attitudes toward homeownership. With people spending more time at home during the pandemic, many households are looking for more space to accommodate remote workspaces and the presence of more people in the home for more of the day.”

“The strength in home sales likely has considerable room to run. Mortgage rates recently hit new lows and applications for mortgages to purchase a home are nearly 20% above their year ago level. The nation’s demographics also increasingly favor homeownership. The number of millennials turning 40 will rise every year through the end of this decade.”

“As strong as the recent surge in new home sales has been, it does not show the full picture. New home sales largely reflect sales of the big national and larger regional homebuilders but exclude most contractor-built homes. That category of homes has become larger as more home buyers have shown interest in reviving neighborhoods.”