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Sales of new single-family homes continued at a near-record pace in May, bumping up 2.1 percent to a seasonally adjusted annual rate of 1.298 million units, according to figures released by the U.S. Commerce Department last week. This was 4.4 percent higher than April of last year and less than 1 percent behind the all-time record pace set in October 2004.
“Home builders continue to see very strong demand for new homes and are striving to meet that demand despite serious supply constraints in some parts of the country,” said David Wilson, president of the National Association of Home Builders (NAHB) and a custom homebuilder from Ketchum, Idaho. “Our recent survey of builders indicated a high level of confidence in the market for the months ahead.”
“Positive economic and financial factors continue to drive sales of new homes,” said NAHB Chief Economist David Seiders. “Historically low mortgage rates, combined with good growth in household income and employment, have sales on track to set another annual record in 2005.”
Two of four regions across the country posted increased sales in May. Sales in the Midwest jumped 22.9 percent while sales in West were up 1.7 percent from the month before. Sales in the south dipped 0.8 percent and sales in the Northeast dropped 24.5 percent following a 27 percent surge the month before.
The inventory of new homes for sale was 442,000, a 4.2 months’ supply at the May sales pace. “The inventory situation is quite healthy. Only 22 percent of the homes in the inventory are completed units, 57 percent are under construction and about 20 percent are units that have been permitted but not yet started – a historically high proportion,” Seiders said. “The level and structure of the inventory indicates that builders are working hard to keep up with very strong home buyer demand.”