Real new home sale prices and existing-home sale prices have been rising very sharply. When that starts to give way and we don't have the equity market picking up where housing left off, that's another reason the economic expansion will be gradual.
Rates might be low, but people are starting to realize that rates will go up. Remember you've got to get a mortgage down the line, maybe six months out when the home is complete. People are preparing for it.
With the surprise jump in new home sales and the outsized rise in existing home sales, we now see that widespread talk of the demise of our moderate economic recovery has been somewhat exaggerated.
When one looks at the MBA data that reveal that applications for the purchases of new homes are down 7.5 percent on a year-over-year basis, it is not hard to see that the gain reported this month is not a sustainable trend.