New-Home Sales Edge Down In October
|November 29, 2006|
Sales of new single-family homes edged down in October, but showed signs of stabilization, according to figures released by the U.S. Commerce Department today. The preliminary sales pace dipped 3.2 percent for the month to a seasonally adjusted annual rate of 1.004 million units, equivalent to the average pace for the third quarter of the year. “The new-home sales report by the government is in line with what builders have been reporting from the field for several months, that the market correction in terms of sales is largely behind us and the market is stabilizing,” said National Association of Home Builders (NAHB) President David Pressly, a home builder from Statesville, N.C. “Our surveys show that nearly half of the builders are now trimming prices and most are offering non-price sales incentives. These efforts have helped,” Pressly added. “A variety of market measures indicate that home sales now are stabilizing following a substantial correction from the unsustainable highs reached last year,” said NAHB Chief Economist David Seiders. “Aggressive sales efforts by builders, combined with historically low mortgage interest rates and solid growth in employment and household income, have buoyed housing affordability in recent months.” “Indeed, surveys of consumer sentiment show that home buying conditions improved markedly in both October and November,” Seiders said. The inventory of new homes for sale fell for the third consecutive month in October to 558,000 units, equivalent to a 7.0 months’ supply at the current sales pace. Completed homes for sale were nearly 30 percent of the inventory, while units still under construction represented 54 percent of the inventory and units for-sale that were permitted but not yet started represented more than 16 percent of the inventory level. While completed units have been a rising share of total homes for sale, the median length of time that completed homes were on the market was only 3.8 months in October, down from 4.0 months a year earlier.