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March New Home Sales Up Some as Credit Tightens
Sales of new single-family homes rose a slight 2.6% in March to a seasonally adjusted annual rate of 858,000 units, following sharp declines in both January and February, according to figures released by the U.S. Commerce Department on April 25. The March sales pace was 23.5% below a year earlier.
"The increase in home sales for March was quite disappointing, considering the weather-related weakness recorded earlier this year," said David Seiders, NAHB’s chief economist. "Weather conditions were fundamentally good in March but we gained back only a small fraction of the January to February loss."
"The weakness in home sales squares with the results of the recent NAHB survey of single-family home builders," Seiders said. "Our Housing Market Index lost ground in both March and April, and reports from large companies show not only erosion of sales activity, but also an increase in sales cancellations."
Seiders noted that the recent dampening of activity was related to the problems of the subprime mortgage sector and related tightening of lending standards in other segments of the mortgage market.
"Builders are reporting direct impacts on both sales and cancellations as prospective buyers are unable to get mortgage credit or are unable to sell their existing homes because of credit tightening," he said.
The inventory of new homes for sale edged up in March to 545,000 units, equivalent to a 7.8 months' supply at the March sales pace. Completed homes for sale were 33% of the inventory, while units still under construction comprised 50% and units for-sale that were permitted but not yet started represented almost 17%. The median length of time that completed homes were on the market was 5.6 months in March, up from 5.2 months in February.
Regionally, new-home sales rebounded 50% in the Northeast and 9.8% in the Midwest in March, following severe winter weather the month before. Sales were down 2.7% in the South and 0.9% in the West.
"The sudden tightening of mortgage conditions has had a profound impact on the housing market, and it is hard to know how far the credit pendulum will swing," Seiders said. "NAHB's forecast still shows improvements in home sales and housing production by the second half of this year, although these forecasts are subject to an unusually wide range of risks."
 Construction Forecast Conference Now Available on the Internet
The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.
Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.
To Purchase the Webcast
To purchase the Webcast, visit www.nahb.org/cfcwebcast.
 Want to Know Your State’s Starts Forecast for 2008?
Find out in HousingEconomic.com’s State Starts Forecast (sample). The starts forecast includes downloadable Excel tables of total, single-family and multifamily starts by region and state.
To learn more, visit www.housingeconomics.com.
 NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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