New Home Sales Slow in January, But Inventories Drop
Following gains in November and December, new single-family home sales dropped 16.6% in January to a seasonally adjusted annual rate of 937,000 units, 20.1% below the pace of a year earlier, the Commerce Department reported last week.
Despite January’s decline, which followed an upward revision for December, new single-family sales remained in the narrow range that has persisted since the middle of last year.
"The falloff in new-home sales in January largely reflected a return to more normal weather conditions, following a weather-related increase in sales late last year," said NAHB Chief Economist David Seiders. "NAHB's monthly surveys actually have been showing modest improvements in builders' confidence regarding home buyer demand since last September."
"The new-home sales statistics continue to show a lot of month-to-month volatility, but the pattern has been fundamentally flat since the middle of last year," Seiders said. "The market is being supported by solid gains in employment and personal income, as well as by a historically low interest rate structure, and we expect those supports to be well maintained as we move forward. Furthermore, builders continue to use both price and non-price incentives to bolster sales and reduce inventory," he added.
The inventory of new homes for sale edged down in January to 536,000 units, the lowest since February 2006 and equivalent to a 6.8 months' supply at the January sales pace.
Nearly 33% of the inventory was comprised of completed homes for sale; 51% consisted of homes still under construction and units with permits that were not yet started accounted for 16% of the inventory.
Completed homes were on the market for a median of 4.8 months in January.
Homes sales declined in January in all four regions of the country.
Sales were down 37.4% in the West, 18.7% in the Northeast, 9.7% in the South and 8.1% in the Midwest.
The median price of the new homes sold in January was $239,800, slightly higher than the previous month but 2.1% below a year earlier.
Is the Housing Correction Over? Attend Construction Forecast Conference
Will housing demand outweigh affordability hurdles, inventory overhangs and the retreat of investors? Where are home prices headed?
Get the answer to these and other questions at the Construction Forecast Conference — Spring 2007 on April 26 in Washington, D.C.
Panels of nationally recognized experts will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys at the day-long conference.
For more information and to register, click here.
The conference is also available via Webcast. For Webcast information, visit www.nahb.org/cfcwebcast.
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Find out in HousingEconomics.com’s Long-Term Forecast.
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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 the middle of the 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.