New-Home Sales Cool Slightly In January

February 26, 2004

New-home sales dipped slightly in January following a torrid 2003 fourth quarter, but remained well above last year’s record-setting pace. The seasonally adjusted annual rate of new single-family homes sales was 1.106 million, the Commerce Department reported today, down 1.7 percent from December’s upwardly-revised rate of 1.125 million, but 9.6 percent above the January 2003 rate of 1.009 million units.

"Builders across the country are still very upbeat about the single-family housing market," said Bobby Rayburn, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Jackson, Miss. "Harsh weather may have affected sales in some regions of the country, but with low mortgage rates and strong house price performance continuing to fuel demand, there was hardly a dent in the totals."

"Some cooling from the world-class pace of the fourth quarter was expected but sales are still well above the overall pace of 2003," said NAHB Chief Economist David Seiders. "We are projecting a 3 percent decline in new home sales for the year as a whole based primarily on anticipated upward movements in mortgage rates as the year progresses. However, if interest rates remain at or near current levels throughout the year, new home sales could equal or even surpass the 2003 record."

Three regions registered sales declines for the month. The Northeast, South and West posted 5.0 percent, 2.1 percent and 3.9 percent declines, respectively. The Midwest registered a 5.6 percent increase over the month before.

The inventory of new homes for sale in January increased slightly to 370,000 units. However, this inventory was only a 4.1-month supply at the current sales pace, quite low by historical standards.

"There was very little increase in inventories, and the supply-demand balance remains very healthy," Seiders said. "In fact, most of the units for sale by builders are still under construction or in the permitting process and not even started."

Source: National Association of Home Builders

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