New-Home Sales Drop to Lowest Level Since August 2000
Sales of new single-family homes fell 3.9% in February to a seasonally adjusted annual rate of 848,000, the lowest level since August 2000, according to figures released today by the U.S. Commerce Department. The February fall-off followed downward revisions to the sales rates for the three previous months.
“The decline in home sales reflects what builders are telling us,” said NAHB President Brian Catalde. Recent surveys of builders indicate “serious concerns about how the subprime-related shakeout in the mortgage market will affect the housing sector. Today’s numbers suggest we are already seeing serious effects on the lending side,” he said.
“Lending standards apparently are tightening not only in the subprime market but in other components of mortgage lending as well, and this is creating tremendous uncertainties regarding the near-term outlook for home sales and housing production,” said NAHB Chief Economist David Seiders. “The Federal Reserve’s recent statement that there is an ongoing adjustment in the housing sector appears right on target.”
Seiders added that the decline in new-home sales is troubling particularly in view of supportive economic fundamentals — job growth and household income are solid and the interest rate structure remains quite favorable. In addition, the weakening is occurring despite improving affordability conditions in the marketplace, improvements in consumers’ assessments of home buying conditions, and ongoing efforts by builders to reduce inventories by cutting prices and offering other sales incentives.
“While there was some weather-related impact on both the January and February sales numbers, it is obvious that the weakness is more fundamental, and this apparently can be traced to the mortgage market,” said Seiders. “Housing is a credit-dependent sector, and a broad-based tightening of mortgage lending standards certainly does not bode well for families seeking to buy homes.”
Three out of four regions posted declines in new-home sales in February. Sales were down 26.8% in the Northeast, 20% in the Midwest and 7% in the South. Sales were up 24.6% in the West, but Seiders noted that the increase was largely attributable to an unusually low reading in January.
Is the Housing Correction Over? Attend Construction Forecast Conference on April 26
Will housing demand outweigh affordability hurdles, inventory overhangs and the retreat of investors? Where are home prices headed?
Get the answers 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.
Can't Attend in Person? Webcast of Conference Also Available
The conference is also available via Webcast. For Webcast information, 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 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.