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New Home Sales Set Fourth Consecutive Annual Record in 2004

“Sales were up nearly 9% for the year and exceeded one million for the second year in a row,” said NAHB President Dave Wilson. “The record-breaking pace can be attributed to strong demographic demand, low mortgage rates and rising employment and household incomes, and we expect this pattern to continue into early 2005.”

Total new single-family home sales for the year reached 1.183 million, an 8.9% increase from the previous annual record of 1.086 million set in 2003. The pace of new-home sales for December reached a seasonally adjusted annual rate of 1.098 million units, up a slight 0.1% from November’s downwardly revised pace of 1.097 million units.

“The sales pace for the fourth quarter was almost identical to the third quarter, and while we anticipate a slight decline in 2005, the performance of the housing market has reached a very high plateau,” said NAHB Chief Economist David Seiders.

All four regions of the country recorded solid annual sales increases for 2004, with sales reaching more than 83,000 in the Northeast, 209,000 in the Midwest, 345,000 in the West and 546,000 in the South. Sales for December were a mixed bag, however, decreasing 16.3% in the South and 15.7% in the Northeast but rising 6.3% in the West and 55.5% in the Midwest.

For the year, the median sales price of new single-family homes rose 12.2% to $218,000, up from $195,000 in 2003.

There was an inventory of 432,000 new homes for sale at the end of last year, a 4.8 months’ supply at the December sales pace. “The inventory situation inched up during the final months of 2004 but, as in previous months, most of the recent increase has been for units permitted but not yet started,” Seiders said. “The inventory situation is not worrisome, particularly if builders keep the numbers of units that are under construction or completed under close control,” he added.

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