Latest indicators and developments in the housing sector show more evidence that the housing market is on the mend. Prior to May, the market had seen unusually high levels of sales due to unusually good winter weather across much of the country. For this reason we should have expected a sharp falloff in sales in May. Instead, May sales were down by only 1.5 percent from their April level. They were 9.6 percent above the May 2011 level.

The data also show permits for single family homes were up 4.0 percent in May from their April level and were 19.9 percent above their year-ago level. This is the highest rate of construction since early 2010 when the first-time buyers’ credit was temporarily boosting the market. Also, new home sales in May were at their highest level since the end of the first-time buyers’ tax credit caused a surge in April of 2010.