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New Home Sales Slow in November From Record Pace

“Builders across the country remain very upbeat about the single-family housing market,” said NAHB President Bobby Rayburn. “The NAHB/Wells Fargo Housing Market Index, which is based on our monthly surveys of single-family builders, indicated that all the fundamentals are in place for strong months ahead.”

“The government’s home sales series has been showing a lot of month-to-month volatility, and revisions to preliminary estimates can be quite large,” said NAHB Chief Economist David Seiders. He added that the report on new home sales in November should be viewed in the context of positive signals on housing demand from surveys of both home builders and mortgage lenders.

“The fundamentals supporting housing demand still are quite solid. Mortgage rates are historically low, job growth is moving ahead and household income is rising,” Seiders continued. “Sales of new single-family homes will hit a record in 2004 despite the surprising decline reported for November.”

Led entirely by new homes that have been permitted but not yet started, the inventory of new homes for sale climbed 2.2% to 418,000 units in November, representing a 4.5-month supply at the current sales rate, the highest since early 2003.

“The current inventory situation is not worrisome, but builders obviously should be keeping the numbers of units that are under construction or completed under close control as we move into 2005, particularly as the Federal Reserve continues its steadfast campaign of monetary tightening,” Seiders said.

November sales dropped 39.4% in the Midwest, 27.9% in the West and 7.1% in the Northeast and increased 13.6% in the South.

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