New homes sales surged 18.6 percent in May, more than making up for the modest downward revision to April’s numbers. The strongest gains were seen in the South and the West.
Housing Market Is Looking up
New home sales jumped to a 504,000-unit annualized pace, the highest in six years.
The gain comes on the heels of better-than-expected existing home sales numbers released yesterday. This is welcome news considering the general weakness in home sales seen during the first part of the year.
Such a large jump in sales drove already-tight inventories to an even-lower 4-5 months’ supply.
Sales Improve Across Regions
The South and the West are the two largest regions for new home sales and were responsible for the majority of May’s rise. The Midwest kept up its pace of sales after a sizable gain in the previous month, while the relatively small market in the Northeast posted a modest gain as well.
Stronger sales, tighter inventories and improving builder sentiment bode well for new home construction.
Consumer confidence rose 3.0 points in June to 85.2, marking a new cycle high. Both the present situation and future expectations series improved during the month and consumers expressed more optimism about both current and expected employment conditions.
Buying plans for automobiles, homes and major appliances also improved during the month. The only caveat is that the cutoff date for the survey was June 13, so the latest figures likely do not reflect much reaction of the bad news coming out of Iraq.
While overseas events are serious and may push prices higher at the gasoline pump, consumers are most concerned about the state of the job market. The lack of strong job growth is the primary reason consumer confidence has been so slow to recover.
Employment conditions have taken a turn for the better more recently. Stronger gains in nonfarm employment and the recent slide in the unemployment rate are evident in the latest consumer confidence survey. The proportion of households noting that jobs were plentiful in June rose 0.5 percentage points to 14.7 percent, while the share stating that jobs are hard to get fell 0.4 points to 31.8 percent. Although the difference between those two responses still remains negative, it has improved considerably over the past couple of months.
The difference between how consumers view the economy’s prospects six months from now and how they view economic conditions today has also narrowed to just 0.1 points. A positive confidence gap has tended to coincide with above-trend economic growth.
The latest figures indicate that while we are not there yet, we are headed in that direction. The present situation series rose 4.8 points to 85.1. The proportion of consumers rating current business conditions as “good” rose 1.9 points to 23 percent, while the proportion rating conditions as bad fell 1.8 points to 22.8 percent.
June marks the first time more consumers have rated current conditions as “good” than “bad” since the recession ended five years ago. The remaining 54.2 percent of households said that conditions were “normal.”
Consumers are also more optimistic about future business conditions. The proportion expecting conditions to improve in the next six months rose 1.1 points to 18.8 percent. The proportion expecting conditions to worsen also increased, however, rising 0.7 points to 11.4 percent.
Consumers were slightly more optimistic about the pace that jobs are being created, with the proportion expecting more jobs to be created over the next six months rising 1.1 points to 16.3 percent and the proportion expecting few jobs to be created falling 0.2 points to 18.7 percent.
Consumers are less upbeat about the prospects for income growth, with the share expecting their income to rise over the next six months falling 2.1 points to 15.9 percent. The share expecting income to fall also declined, however, and 72 percent of consumers expect their income to remain the same.
Scott Coremin starts today as Director of Sales and Marketing. He comes with an incredible history in the industry, including experience with several indoor furniture companies such as Lexington, Ashley, and Sherrill Upholstery, and a recent assignment at Homecrest furniture shortly after their restructure.
He arrives at a critical time as Early-Buy programs are changing and we adapt to both the Internet and historic changes in the dealer base. Please welcome Scott to Summer Classics.
Dale Boehm has been hired as National Accounts manager. He will focus the majority of his time at the start by helping Parker James and Summer Classics grow their Private Label Programs with National Accounts and large multi-store Retailers. He lives in Birmingham and will be working out of the Montevallo Sales Office.
In addition to National Accounts, he will also represent the wholesale line of Summer Classics and Parker James in Mississippi, Louisiana and Arkansas. Dale will also represent Parker James only in Tennessee and Kentucky.
He joins the team after working with Nestle USA for the last 34 years. He worked in many positions with Nestle, from managing large national accounts to sales management.
Dale will be at the Preview Show and traveling to visit accounts over the next month. Honie Weinstein will continue working her National Accounts.
Agio-USA has promoted Barb Hunter to vice president, National Accounts. Bob Gaylord, president, Agio-USA, made the announcement.
“Barb has successfully worked with countless retailers,” he said, “and her accomplishments have truly been outstanding. In recent years Barb has headed our company’s efforts with some of our largest national accounts.”
“Throughout my career, I’ve admired Agio-USA for being a leader in outdoor furniture,” Hunter said. “Working with Agio for the past 10 years in various retail channels – specialty, mass and clubs – has been an incredible experience and provided tremendous growth opportunities,” she said.
An industry veteran, Hunter has more than 35 years experience in the outdoor sector working with companies such as Sunbeam Outdoor Products and Wellington Home Products. She will continue to focus on Sam’s Club and Wal-Mart Corporation’s domestic and international divisions.