Why the Rise in New Home Sales Promises Years More of Recovery

New home sales were up 33% between August 2013 and 2014. That's good news for a host of reasons, not the least of which is that the housing market has been the slowest sector to recover after the Great Recession.

Better yet, there is still plenty of room to improve, as you can see in this graph from the St. Louis Fed.

One thing of note is that even at an annual rate of 504,000, August home sales are not that high. The average since 1963 is closer to 600,000 and since 1963 the US population is not just 75% higher but the size of the average household has dropped.

The good news is that home sales are recovering. The better news is that while the housing market is recovering, it is still far-off from over-heated. Next Friday, this recovery measured by uninterrupted months of job creation will have reached the record for post-1939 data. And if the pattern of housing sales suggests that this recovery still has a couple more years left in it.