New-Home Sales Break All Previous Records in March
April 26, 2005
Sales of newly built single-family homes rose by an unexpectedly strong 12.2 percent to hit an all-time high seasonally adjusted annual rate of 1.43 million units in March, according to Commerce Department figures released today.
“This surprisingly good number shows there’s still plenty of demand in today’s new-home marketplace,” said David Wilson, president of the National Association of Home Builders (NAHB) and a custom home builder from Ketchum, Idaho. “It may be that higher mortgage rates pushed more fence-sitters to go for it last month, which often happens when further rate gains are expected.”
“The strength of this market continues to surprise most experts, and March’s big acceleration in new-home sales was both unexpected and unaccounted for by our own builder surveys and other market signals,” acknowledged NAHB Chief Economist David Seiders. “Given the pace of sales to date and the slimmer inventories of unsold homes, clearly the production side of this business remains exceptionally healthy. We are, however, keeping a close eye on investor activity in some extremely hot markets.”
According to the Commerce Department, the number of new homes for sale fell about one percent in March, to a relatively thin 3.6 months’ supply at the current sales pace.
Three out of four regions posted higher home sales in March, with the Northeast’s 9 percent decline being the only exception. Sales gained 22 percent in the Midwest, 13.8 percent in the South and 10 percent in the West.
Commerce today also reported substantial upward revisions to its nationwide new-home sales figures for December, January and February.
“Looking to the future, it will be difficult to sustain as quick a sales pace as we’ve seen in March,” Seiders noted. “However, given the fact that long-term mortgage rates have actually fallen since then and that inventories are in such good shape, it’s likely that new-home sales for all of 2005 will challenge last year’s record 1.2 million units.”
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