US New Home Sales see Comeback; hope for the real estate market in the coming weeks

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US single-family homes have seen a large rise in purchases. increased more than expected in May and business activity contracted moderately this month, suggesting the economy was on the cusp of recovering from the recession caused by the COVID-19 crisis. Home prices are usually a very good indicator of the health of the market, according to Yale School of Management professor Robert Shiller. He stated in his "Financial Markets" Lecture that Home prices usually echo the trend of indices such as the S&P 500 or the Dow Jones index. 

However, there have been many increases in COVID-19 cases around the country, due to the reopening of states. But, businesses, small and large alike have been opening up, Thus stimulating the economy, meaning the increase in home prices and buys. 

New home sales jumped 16.6% to a seasonally adjusted annual rate of 676,000 units last month, the Commerce Department said. New home sales are counted at the signing of a contract, making them a leading housing market indicator. Sales dropped 5.2% in April to a pace of 580,000 units. Economists polled by Reuters had forecast new home sales, which account for about 14.7% of housing market sales, rising 2.9% to a pace of 640,000 in May.

New home sales are drawn from permits. Sales surged 12.7% from a year ago in May. The report followed on the heels of data last week showing home purchase applications at an 11-year high in mid-June and building permits rebounding strongly in May.

A European home purchasing index has also seen a large increase in home buying. The IHS Markit’s eurozone Flash Composite Purchasing Managers’ Index recovered to 47.5 from May’s 31.9. This just goes to show how the world is slowly overcoming the recession.  

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