Sales of New Homes Dip 3.0 Percent in June
|July 25, 2006|
Sale of new single-family homes were down 3.0 percent in June to a seasonally adjusted annual rate of 1.131 million units, following a downward revision to the sales rate for May, according to figures released by the U.S. Commerce Department today. Year-to-date, actual new-home sales for the first half of the year were down 11.9 percent from the same period during last year’s record year in new home sales.
“The government numbers are finally reflecting what builders have been reporting from the field for several months,” said National Association of Home Builders (NAHB) President David Pressly, a home builder from Statesville, N.C. “Builders see this as an orderly slowdown and have been slowing their production as market conditions and demand cool down.”
“The slowdown reported today, coupled with the downward revisions of the previous two months, indicates that we are well into the predicted cooling down process,” said Michael Carliner, an economist at NAHB. “We expect this to continue as the impact of recent increases in interest rates is fully reflected in sales.”
“NAHB’s current forecast shows about a 12 percent decline in new-home sales for 2006 as a whole, however, any further monetary tightening by the Federal Reserve would have a more severe negative impact on sales,” Carliner added.
Three of four regions across the country posted a decrease in pace of new homes sales in June. Sales were down in the Northeast by 11.3 percent, in the Midwest by 7.9 percent and in the South by 6.0 percent. The sales rate in the West was up by 8.2 percent for the month. All regions reported substantially lower sales on a year-to-date basis.
The inventory of new homes for sale rose to 566,000 units at the end of June, a 6.1 months’ supply at the current sales pace. Almost all of the increase was for-sale units that were permitted but not yet started, which represented nearly 20 percent of the inventory level.
Units still under construction were almost 57 percent of the inventory, and completed homes for sale were 23 percent of the total ? about the same as a year earlier. The median length of time that completed homes for sale were on the market was 3.8 months in June, compared with 4.0 months a year earlier.