New-Home Sales Decline In May
|June 26, 2008|
In the latest evidence of severe and ongoing weakness in the nation’s housing market, the Commerce Department reported today that sales of newly built, single-family homes fell 2.5 percent in May to a seasonally adjusted annual rate of 512,000 units, largely offsetting a gain they recorded in the previous month. “The fact that new-home sales are occurring at such a slow pace in the middle of the home buying season, with inventories only barely inching downward, is a strong indication of just how critical it is for Congress to move forward immediately with housing stimulus legislation,” said National Association of Home Builders (NAHB) President Sandy Dunn, a home builder from Point Pleasant, W.Va. A bill that could be voted on in the Senate today contains the crucial element of a temporary home buyer tax credit, which would help shrink inventories of unsold units and reduce housing’s significant drag on economic growth. “The nation’s housing market clearly continues to display fundamental weakness, and today’s numbers are in line with what builders have been telling us in our regular surveys,” said NAHB Chief Economist David Seiders. “Home builders have been doing everything they can to limit the production of new units and move existing inventory, but it hasn’t been enough to make a significant dent in the backlog yet,” he said. “A temporary home buyer tax credit would help release some of the pent-up demand among potential buyers who are holding off on a home purchase in hopes of prices going lower. This, in turn, could provide a significant shot in the arm for the overall economy.” Commerce’s report indicated that the inventory of new homes for sale fell 1.7 percent in May to 453,000 units, which is a 10.9-month supply at the current sales pace. Regionally, sales were down 7.9 percent in the Northeast and 11.6 percent in the West in May. Sales gained 5.1 percent in the Midwest and rose a marginal 0.4 percent in the South.