New-home Sales Rise In May
June 26, 2006
WASHINGTON - Sales of new single-family homes rose 4.6 percent to a seasonally adjusted, annual rate of 1.23 million units in May from a downwardly revised number in the previous month, according to figures reported by the U.S. Census Department today.
"If the sales gain in today's report holds true, it's likely due at least partly to the extra efforts that builders are making to attract the many potential buyers who are still out there," noted David Pressly, president of the National Association of Home Builders (NAHB) and a home builder from Statesville, N.C. "Many are stepping up incentives or trimming prices to help maintain sales volume."
"That said, the May sales number seems a bit too good to be true, especially in view of the wide confidence intervals around these statistics. Furthermore, the latest results of NAHB's builder surveys indicate weaker demand for homes coinciding with higher interest rates, deepening affordability issues and a retreat of investors/speculators from the market," added NAHB Chief Economist David Seiders. "We don't think the cooling process for housing is over yet, and we wouldn't be surprised to see a downward revision to May's numbers as well as some decline in coming months."
Three out of four regions posted gains in the Census figures for new-home sales in May. The South had the strongest gain, of 6 percent, followed by the West's 5.3 percent increase and the Midwest's 2.7 percent gain. Sales fell nearly 8 percent in the Northeast.
Meanwhile, the inventory of new homes for sale declined slightly in May to 556,000 units, equivalent to a 5.5-month supply at the current sales pace.