Sales of new single-family homes, bolstered by favorable mortgage rates and solid house-price gains, are expected to top 1 million units this year even though the seasonally adjusted sales rate dipped slightly in October, according to the National Association of Home Builders (NAHB). The Commerce Department reported a seasonally adjusted annual rate of 1.105 million units, down 3.5 percent from September’s revised rate.
“New-home sales are continuing well in excess of last year’s previous record pace,” said Kent Conine, president of NAHB and a home and apartment builder in Dallas. “While we experienced a slight slowdown last month, financing conditions remain extremely favorable across all segments of the market and we remain on course to establish a new sales record for single-family homes for 2003.”
“The frenetic pace established during the third quarter was unsustainable,” said NAHB Chief Economist David Seiders. “Some slowdown was expected in October, but we’re projecting 1.08 million home sales for the year as a whole, up by nearly 11 percent from 2002. Consumer sentiment and confidence both increased in November, and the job market finally appears to show systematic improvement. The environment for housing remains very good for the balance of 2003.”
Three regions registered modest declines for the month. The Midwest and South posted 0.5 percent and 1.0 percent declines, respectively, while in the Northeast the pace slowed 3.3 percent. The West registered a 9.4 percent decline, but sales still were 1.4 percent above a year earlier.
The inventory of new homes for sale in October increased slightly to 360,000 units, a still thin 4.0 months’ supply at the current sales pace but exceptionally low by historical standards. “Inventory has increased slightly, but there is a negligible increase in the actual number of units that have been completed and are for sale,” Seiders said. “Most of the inventory increase represents units permitted but not yet started as well as units still under construction.”