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New-Home Sales in June Hold Close to Record Pace

New home sales were at a record level during the May-June period, according to the Commerce Department. Sales in June were just below the record 1.337-million unit pace set in May and stood 11.1% ahead of the rate of a year earlier.

“Buyer demand for new homes remains quite strong as job growth proceeds and consumer confidence builds,” said NAHB President Bobby Rayburn. “NAHB’s Housing Market Index, which is based on our monthly surveys of single-family builders, indicates that the perception of an improving economy is helping to drive this market.”

Noting that the fundamentals for housing demand remain highly positive, NAHB Chief Economist David Seiders attributed the brisk sales pace of recent months to expectations of rising interest rates later in the year. Mortgage interest rates actually fell below their May-June levels in July, he said. "While home buying may fade later this year, it now appears that home sales for 2004 will easily surpass the record set last year.”

Sales in June declined 14.2% in the Northeast, 13.1% in the West and 2.9% in the Midwest and increased 9.6% in the South. But in all four regions sales activity on average increased in the second quarter over the first quarter of this year.

The 374,000-unit inventory of new homes for sale in June represented a 3.4-month supply at that month’s sales pace. “The inventory situation improved during May and June as sales surged, and the supply-demand balance in the new-home market was very, very healthy at mid-year,” Seiders said. “That bodes well for both housing production and home prices in the months ahead.”

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