The housing market is accelerating. Existing home sales in March reached the highest level of the recovery at 5.7 million units annualized. Prices grew by +5.3% y/y, and supply remains tight at 3.8 months vs. the average of 7 months. New home sales hit 621,000 units annualized and are the second highest of the recovery (after the 622,000 in July 2016). Prices are erratic but have grown +6.9% annually since the bottom of October 2010, and supply is tight at 5.2 months vs. the 5.9 month average. The market for new homes is only 10% of that for existing homes but provides a much higher boost to the economy per unit, since a new home requires much more materials and employees to construct. Consumer confidence slipped from 124.9 to 120.3, perhaps on concerns that policy changes seem stalled, but it is still the second highest in over 16 years. But while confidence is necessary for consumption, it is not enough. Consumers also need increasing income and wages, and until those emerge consumption is likely to continue to disappoint, and in fact may contribute to a very weak Q1 GDP reading
