Proving that housing has been a driving force behind the national economy recovery, the Commerce Department says that sales of new single-family homes topped one million units in 2003, establishing a record high for the third consecutive year.
“The numbers, while amazing, should not be a surprise to most builders,” said Bobby Rayburn, president of NAHB and a home and apartment builder from Jackson, Miss. “The sales pace has been excellent throughout the last six months, primarily fueled by low mortgage rates and strong house price performance, and the market fundamentals are in place for this pace to continue into early 2004.”
Total new single-family home sales for 2003 reached 1.085 million, up 11.5 percent from the previous annual record of 973,000 in 2002. For December alone, new home sales hit a seasonally adjusted annual rate of 1.060 million units, down 5.5 percent from November’s upwardly-revised pace of 1.117 million units.
“The sales pace was strong throughout the fourth quarter, and while we anticipate a slight decline in 2004, it is predicated on a projected rise of mortgage rates as the year progresses, to 6.5 percent by year-end,” said NAHB Chief Economist David Seiders. “However, interest rates ar e currently lower than had been expected, and the rates are not projected to move up in the near future. Consumer confidence in housing is still strong, and housing continues to be an important contributor to our nation’s economy.”
Three regions recorded record high sales for 2003. The Midwest had 189,000 sales, the South posted 512,000 sales and the West registered 306,000 sales. Sales in the Northeast topped 79,000, not a new record, but up 21.5 percent from 2002. For the month, the sales pace across all regions was mixed. The Northeast and Midwest posted 12.2 percent and 8.7 percent gains over the November rate, respectively. The South and West showed 8.1 percent and 11.2 percent declines, respectively.
The inventory of new homes for sale was 374,000 at the end of 2003, a 4.3 months’ supply at the December sales pace. “The inventory situation still is healthy despite moderate increases during the final months of 2003,”
Seiders said. “Most of the recent increase has been for units still under construction, and the length of time that completed units are on the market actually has been declining to a median 3.7 months in December.”