2005 Another Banner Year for New-Home Sales
Sales of new single-family homes closed out 2005 on an up note, climbing to 1.282 million, 6.6% above the previous annual record of 1.203 million in 2004, the Commerce Department reported last week.
New home sales ended the year with a 2.9% increase in December, rising to a seasonally adjusted annual rate of 1.269 million units, though still 6.6% below October’s pace.
“There is no denying that 2005 was a tremendous year for the housing industry,” said NAHB President David Pressly. “Very favorable interest rates and strong buyer demand spurred another year of record sales. However, builders are quite realistic about the future and expect to see an easing of sales this year.”
“While new-home sales were quite strong throughout 2005, we see a cooling of the market to a healthy and more sustainable pace in the months ahead, as substantiated by recent surveys of our builders,” said NAHB Chief Economist David Seiders. “For 2006, we expect to see a 6%-7% drop in sales, which is certainly no cause for alarm. This would make 2006 the second or third best year in housing history.”
Regionally, new home sales for the year were mixed. Sales were up 13.3% in the South and 3.4% in the West, but they were down 2.4% in the Northeast and 2.9% in the Midwest.
There was a 516,000-unit inventory of new single-family homes for sale at the end of 2005, a 4.9 months’ supply at the December sales pace. Of that total, 21% were for-sale units that had not yet been started, 57% were units still under construction and 22% were completed.
Seiders noted that builders have continued to maintain a healthy balance between supply and demand.
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