CHART OF THE WEEK
After a relatively stable 2015 in terms of volumes, both the resale and new residential sales markets have picked up in recent months. New residential sales jumped 16.6% in April to their highest level since January 2008. Whilst a jump of this magnitude is exceptional and can lead to a fallback the following month, the fact remains that new residential sales are on an upward trend. In the resale market, pending home sales have increased sharply in recent months (+10% since January), which should follow through in final completion numbers.
Our analysis
Real estate recovery continues in the United States.
Because new housing stocks are still very low, new residential sales will continue to drive residential construction. In terms of housing starts, a shift is occurring from multi-family housing which was highly dynamic until 2015 and seems to be stabilising around its historical average of about 400,000 new units per year, towards individual houses, where the upturn is in full swing. Whilst 720,000 single-family housing starts got underway in the past twelve months, this level could easily exceed a million units.
The opinion expressed above is dated May 27th, 2016 and is liable to change
This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.
