The surge of US new home sales in April, which rise at the fastest rate in eight years, observers say the economy is solid enough to brace an interest rate as early as July.
Toll Brothers’ Chairman Robert Toll said that increased rates can actually trigger demand. “What you have with a price increase is an increase in demand created because the price has gone up, which by the way may come to us in the summer months this year,” he said. “If the Fed goes up and the mortgage rates go up an eighth or a quarter, it probably means price increases are coming soon, which spurs demand and spurs action. So it’s too early yet to tell, but we could be onto something good.”
A recent US Census report shows increase in suburban population, which is advantageous of the new home market. “As millennials mature, studies indicate that their appetite for home ownership is consistent with past generations, which is, of course, encouraging for our industry,” Toll said.
Toll reiterated the significance of the stable April home sales data. “The release stated this represents a supply of 4.7 months at the current sales rate. With a little bump in demand we could be off to the races,” he said.