New Home Sales Reach New Record In 2001

January 29, 2002

Sales of newly built homes hit a record high 900,000 units in 2001, up from 877,000 units in 2000 and a surprisingly strong number for a year marked by economic recession and the catastrophic events of Sept. 11. Indeed, sales for the fourth quarter as a whole were up by 3.5 percent from the third quarter of 2001, according to Commerce Department figures released today.

?The market for new homes ended the year on a high note, with a 5.7 percent increase to a 946,000-unit rate in December,? said Bruce Smith, president of the National Association of Home Builders (NAHB) and a home builder from Walnut Creek, Calif. ?That?s the fastest sales pace since March 2001, and signifies a complete rebound to pre-recession activity levels.? Smith credited the housing market?s strong performance throughout 2001, and especially at year?s end, to favorable interest rates, good house-price performance and resilient buyer demand.

Smith said the strong finish for 2001 home sales, along with maintenance of healthy inventories of unsold homes (308,000 units), bodes well for the housing market and economy in 2002. ?With continuing solid market fundamentals, including low interest rates, housing is poised to help pull the economy out of recession early this year,? he said. ?Given that the average buyer spends $8,900 on housing-related furnishings and property alterations in the year following a new-home purchase, consider the tremendous stimulus that record home sales are already providing to this country?s Gross Domestic Product and employment base.?

December?s 5.7 percent gain was due entirely to the West, where a 35.1 percent rebound pushed sales to a 281,000-unit rate ? the region?s fastest sales pace since February 2001. The Northeast and South posted modest declines of 1.4 percent and 1.1 percent, respectively, in December, while the Midwest posted a 9.6 percent decline. For the fourth quarter, sales were up by 11 percent in the Northeast and 4 percent in the West and South; the sales pace slipped by less than 2 percent in the Midwest, where the impacts of the economic recession have been the heaviest.

Source: National Association of Home Builders

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