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New Home Sales Surge to Record Level in May

“This is one more confirmation of what builders in the field continue to report: buyer demand for new homes remains strong as the economic expansion strengthens and job growth accelerates,” said NAHB President Bobby Rayburn. “And NAHB’s Housing Market Index for June only shows continued high levels of home sales and builder confidence.”

Rayburn added that a thin supply of new homes for sale provides a further indication of the ongoing “health and good balance of this market.” The Commerce report showed that inventories of unsold new homes in May were down to a 3.3 months’ supply at the current sales rate.

Sales of new single-family homes in May posted double-digit gains in some regions, most notably in the Northeast, where they jumped 53.2%. The South and West registered 20.3% and 6.5% gains, respectively, while sales in the Midwest were flat following strong sales in April.

“The extraordinary sales pace for May probably involved some acceleration of transactions in anticipation of higher interest rates down the line,” said NAHB Chief Economist David Seiders. “But it’s clear that underlying housing demand is quite strong and the current supply-demand balance is excellent.”

NAHB is now forecasting another record year for new home sales in 2004, Seiders said. In addition, “this powerful performance in the second quarter will certainly keep housing as a strong, positive component of the nation’s Gross Domestic Product,” he said.

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