New single-family home sales for November came off a record October buying surge, dropping to a seasonally adjusted annual rate of 1.125 million units, the U.S. Commerce Department reported recently. Despite a 12.0 percent decline from October’s record sales pace, the November rate was 3.6 percent above the sales pace of November 2003.
The government revised October’s single-family home sales pace upward to 1.278 million units, and the October-November average is above the pace for the first three quarters of the year.
“Builders across the country remain 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. “The NAHB/Wells Fargo Housing Market Index, based on our monthly surveys of single-family builders, indicated that all the fundamentals are in place for strong months ahead.”
“The government’s home sales series has been showing a lot of month-to-month volatility, and revisions to preliminary estimates can be quite large,” said NAHB Chief Economist David Seiders. “Today’s report on new home sales should be viewed in the context of positive signals on housing demand from surveys of both home builders and mortgage lenders.
“The fundamentals supporting housing demand still are quite solid. Mortgage rates are historically low, job growth is moving ahead and household income is rising,” Seiders continued. “Sales of new single-family homes will hit a record in 2004 despite the surprising decline reported for November.”
The inventory of new homes for sale moved up 2.2 percent to 418,000 units in November. This represents a 4.5 month supply at the current sales rate, the highest since early 2003. However, the rise in the inventory of unsold new homes entirely reflected homes that have been permitted but not yet started. The inventory of homes under construction or completed was virtually unchanged.
“The current inventory situation is not worrisome, but builders obviously should be keeping the numbers of units that are under construction or completed under close control as we move into 2005, particularly as the Federal Reserve continues its steadfast campaign of monetary tightening,” Seiders said.
Sales in the Northeast, Midwest and West declined for the month. The Northeast dropped 7.1 percent, the Midwest posted a 39.4 percent decline and the West fell 27.9 percent. Sales in the South increased 13.6 percent for the month.