New-Home Sales End Year On High Note, Up 4.8 Percent In December Printer Friendly
|January 26, 2007|
Housing demand showed further signs of stabilization heading into 2007, as sales of new single-family homes rose 4.8 percent to a seasonally adjusted annual rate of 1.12 million units in December, according to figures released today by the U.S. Commerce Department. “Today’s housing report squares with our most recent builder surveys, which show that traffic of prospective buyers is up and consumers are responding favorably to price adjustments and widespread sales incentives,” said David Pressly, president of the National Association of Home Builders (NAHB) and a home builder from Statesville, N.C. On an annual basis, new home sales registered 1.061 million units in 2006. While this represents a 17.3 percent drop from the all-time high achieved in 2005, the sharpest percentage decline since 1990, the sales level was on par with the solid sales numbers registered in 2003, which preceded the unsustainable housing boom of 2004 and 2005. On a quarterly basis, new home sales posted a rate of 1.061 million in the final quarter of 2006, up from 1.007 million in the third quarter, the quarterly low-point for the year. “The stabilization of home sales and housing demand that we are now seeing is the first step required to put the housing market back on track,” said NAHB Chief Economist David Seiders. “The second step is to whittle down the inventory overhang, which builders have been doing since July, and the final step will be to bring housing starts back up to sustainable levels. We anticipate that starts will bottom out in the first quarter of this year and that residential construction activity will be moving up by the second half of 2007.” The inventory of new homes for sale hit a 10-month low of 537,000 units in December, which is equivalent to a 5.9-month supply at the current sales price – down from a recent high of 7.2 in July. On a regional basis, new home sales were up 27.3 percent in the Northeast, 26.6 percent in the Midwest and were flat in the South. Sales fell 4.4 percent in the West. Seiders noted that unusually warm weather conditions probably boosted sales in the Northeast and Midwest regions to some degree in December, but that the stabilization pattern evident in the fourth quarter is quite convincing and consistent with other available housing indicators, including NAHB’s survey measures.