Home sales will continue to strengthen

Following the weather-related weakness at the start of the year, new home sales surged 7.8% m/m to a seven-year high in February. Existing sales rebounded by 1.2% m/m, despite another large drop in the snow-hit Northeast. Looking ahead, we expect the strength of the labour market and a gradual loosening in credit conditions to push total home sales to around 5.7m in 2015, up from 5.4m last year. February’s strong sales data, together with the leap in the index of pending home sales to a 21-month high, suggests that this upturn is well underway.