New-Home Sales Surge to Record High In May
June 27, 2002
Indicating that the nation?s housing market continues to provide a crucial source of strength to the national economy, sales of new single-family homes surged 8.1 percent to a record high seasonally adjusted annual rate of 1.03 million units in May, the Commerce Department reported today. Commerce also made substantial upward revisions to home sales numbers for each of the last four months.
?Low interest rates and the solid investment potential of homes are encouraging more buyers than ever to go forward with a new home purchase,? said Gary Garczynski, president of the National Association of Home Builders (NAHB) and a builder/developer from Woodbridge, Va. ?These buying decisions are generating thousands of dollars in related purchases that in turn will help fuel local economies.? He noted that in the first 12 months after purchasing a newly built home, owners spend an average of $8,900 to furnish, decorate and improve their investment.
Interest rates on long-term mortgages were hovering at about 6.8 percent in May, and have gone as low as 6.63 percent in recent weeks. This favorable financing climate has helped bring homeownership within reach of thousands of potential buyers, said Garczynski, but millions more Americans are still priced out of the market.
?While the excellent condition of today?s housing market -- particularly strong house-price performance -- is encouraging many buyers, the gap between the housing haves and have-nots continues to widen,? Garczynksi noted. ?In particular, low-income and minority households need help to achieve the American dream of homeownership, and we applaud President Bush?s recently announced initiative to address this need. Home builders and their affiliates look forward to working with the Bush Administration and Congress to expand housing opportunities for all Americans.?
Sales rose in every region of the country in May. Rebounding from a previous dip, the Northeast posted the biggest gain, of 26.4 percent, while the South, West and Midwest posted more moderate gains of 10.6 percent, 4.3 percent and 2.7 percent, respectively.
The inventory of new homes for sale rose by just over one percent from April to 324,000 units in May. However, despite that increase, the months? supply fell from 4.1 in April to 3.8 in May due to the present sales pace. ?At this point, many builders are going to be kept busy filling orders now on the books, and we expect a healthy pace of sales through the second half of the year,? Garczynski said. ?With the exceptional performance of the last several months, it?s likely that sales for all of 2002 will exceed last year?s record of 908,000.?
Source: National Association of Home Builders
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