Undoubtedly the Cool-Aid drinkers on Wall Street and at the Fed were encouraged that good weather has got everything back on track. The morning headline from Census was that new home sales were up 6.4% from March.
Lets see. There are about 130 million housing units in the USA and in good years we used to build about 1.5-2.0 million new units. But thanks to the long Greenspan housing boom from 1994-2007, the nation is now saddled with massive excess supply and has nearly 20 million vacant units. So home builders have been slow to translate the Fed's cheap money into new starts because the demand just isn't there to absorb the existing enormous surplus.
Compounding the slump is the fact that new household formation rates have dropped into the sub-basement of historical experience---coming in at about 500K annually in recent years compared to 1.5-2.0 million in pre-crisis times. The reason the data is in the sub-basement, of course, is that the kids are still in mom and dad's basement, surviving on student loans and hamburger flipping gigs a few hours per week.
So it is not surprising that new housing starts and new home sales have the trend profiles shown below. Needless, to say these graphs do depict a "new normal", not the same old same old business cycle recovery that the Fed and its acolytes keep espying just around the corner.
So that gets us to the April new home sales numbers that got the algos all jiggy, including carbon-unit type algos like Joe LaVorgna, Deutschebank's chief economist and stock tout, who mustered the following:
"Apr new home sales rebounded strongly (433k vs. 407k), providing further evidence that housing is recovering from Q1 weather-related weakness".
Yes, Joe, actual monthly sales in April came in at 41,000 compared to 39,000 in March. That's a gain of 2K that requires a Wall Street microscope to ascertain, but then it was also a 2K drop from the 43K new homes sold last year.
Might the more relevant point here be that new homes sales are still bumping along a mighty historic bottom; that the beginning of interest rate normalization has already put the kibosh on the tepid recovery that had been underway; and that $3.5 trillion of Fed money printing since September 2008 has done far more for the Wall Street gamblers who speculate in homebuilder stocks than for the Main Street homebuilders and tradesman who actually build them.
Never have the 19 unelected bureaucrats who inhabit the Eccles Building wreaked more havoc with what used to be a prosperous American economy. And then they have the audacity to proclaim progress in making everything better!