May 23 - Sales of new homes are on the rise and so are prices, with the median cost up close to 15 percent from a year ago. Bobbi Rebell reports.
Moving into a brand new home is getting pricier. New home sales are up- and along with that- so are prices. The median sales price of a new home was $271,600 in April. That's up close to 15% from a year ago. It's the highest on record since the government started keeping track back in the early 1960's. That's strong evidence the housing recovery remains intact- and that's helping consumers- and the entire U.S. economy. Laura Rosner, U.S. Economist, BNP Paribas: SOUNDBITE: LAURA ROSNER, U.S. ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "What the house price data reflect is a market that it has bottomed. That it is clearing and that it is returning to normal. So that is a very positive thing for the economy. Does it mean that we are going back to the same spending behavior as we saw in the early 2000's - probably not. But it is definitely an improvement." While sales were up 29 percent from a year ago- the rate is still low by historical standards. David Goldberg covers home builders at UBS: SOUNDBITE: DAVID GOLDBERG, HOME BUILDERS ANALYST, UBS (ENGLISH) SAYING: "Affordability is still great but if mortgage rates start to come up and as prices start to get better and you kind of get more and more to the marginal buyer, you are not going to have the same pricing power that you have today. So look for the next 12 months. We are going to stay on that very highly sloped line but as you get past that 12, 18, 24 months out I think price appreciation is going to start to moderate even if volume continues to remain pretty robust." On the news a number of home builders' stocks got a boost. Home stocks have been on tear for the last year- the S&P Home Builders Index up more than 50%. And that makes Goldberg hesitant about the sector's valuation: SOUNDBITE: DAVID GOLDBERG, HOME BUILDERS ANALYST, UBS (ENGLISH) SAYING: "I think the stocks are pretty expensive at this point when you think about fundamentals and what is happening. Yes, housing is getting better, yes housing is going up and the numbers that we are seeing are absolutely real but there is a lot baked into the group right now about further growth and further price appreciation." Goldberg's other big concern: the Fed- and how the real estate market responds to any pullback in support.