New-Home Sales Slide 1.6 Percent In May As Correction Continues
|June 26, 2007|
In the latest indication that the housing market remains in a correction phase, sales of new single-family homes slipped 1.6 percent in May to a seasonally adjusted annual rate of 915,000 units, according to figures released by the U.S. Commerce Department today. The May sales pace was 15.8 percent below a year earlier. “Builders are continuing to offer incentives in order to shore up sales and work down their inventories as home buyer demand remains slack,” said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. “The gradual decline in new-home sales is still underway, and we expect this trend to continue as the market approaches the bottom,” said NAHB Chief Economist David Seiders. “We expect home sales to stabilize before the end of the year, followed by a systematic multi-year recovery beginning in 2008.” The inventory of new homes for sale edged down 1.1 percent in May to 536,000 units, equivalent to a 7.1 months’ supply at the May sales pace and up slightly from 7.0 months in April. Completed homes for sale were 33 percent of the inventory, while units still under construction represented almost 51 percent of the inventory and units for-sale that were permitted but not yet started represented 16 percent of the inventory level. The median length of time that completed homes were on the market was 5.7 months in May, down from 5.9 months in April. Regionally, new-home sales in May were down 11.0 percent in the Northeast, 7.3 percent in the South and 1.9 percent in the West. Sales were up by 30.8 percent in the Midwest for the month.