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New Home Sales Rise in April, But Trend Is Down
Sales of new single-family homes rose 4.9% in April to a seasonally adjusted annual rate of 1.198 million units, following a substantial downward revision to first quarter sales, leaving sales for the first four months of this year 11.2% below the comparable period of 2005, the U.S. Commerce Department reported last Wednesday.
“The rebound in sales in April, as reported by the government, was somewhat surprising but not that unrealistic considering the downward revisions that accompanied it,” said NAHB President David Pressly. “Indeed, builders are seeing a tapering off of demand, and NAHB’s Housing Market Index survey of builders fell to a level of 45 in May, the lowest reading since mid-1995.”
“The reported rebound in new-home sales for April certainly is welcome news, although the substantial downward revisions for the first quarter of the year left the sales pace well below 2005 on a year-to-date basis,” said NAHB Chief Economist David Seiders. “We continue to believe that the housing market is cooling down in an orderly fashion from the record pace last year, largely because of a pullback by investors/speculators. NAHB’s current forecast shows about a 13% decline in new-home sales for 2006 as a whole.”
Regionally, new home sales in April climbed 2% in the West, 7.8% in the South and 8.2% in the Northeast, and they fell 1.1% in the Midwest. All regions were down significantly on a year-to-date basis.
The inventory of new homes for sale rose to 565,000 units at the end of April, a 5.8-month supply at the current sales pace. All of the increase was attributable to for-sale units that were not yet started, which represented 20% of the inventory level.
Units still under construction accounted for almost 57% of the inventory, and completed homes for sale were 23% of the total ― about the same as a year earlier. Completed homes for sale were on the market for a median of four months in April, compared with 4.4 months a year earlier.
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Seiders Says, 'Builders Have Not Lost Touch With Demand' on the NAHB Economics Blog
NAHB Chief Economist David Seiders says that "builders have not lost touch with demand" on NAHB's economics blog, “Seiders on Housing” — an informal Internet-based forum dealing with economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to Seiders' expert opinions, projections and responses. Then let Seiders know what you think by giving your perspective.
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