New-Home Sales Move Down Further In February

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Washington - March 26

Sales of new single-family homes fell by 1.8 percent in February to a seasonally adjusted annual rate of 590,000 units, according to newly released numbers from the U.S. Commerce Department. This sales pace was nearly 30 percent below a year earlier and down by 58 percent from the peak in July 2005.

"Builders have been pulling out all the stops to sell homes and narrow the supply of units on the market," noted Sandy Dunn, a home builder from Point Pleasant, W.Va. and president of the National Association of Home Builders (NAHB). "Unfortunately, buyer demand remains very weak heading into the spring home buying season. Clearly, Congress needs to act decisively upon its return from recess next week to enact measures that will keep housing from dragging the economy into a recession."

"Our latest member surveys confirm that builders have seen an improvement in the number of prospective buyers who are visiting model homes, and consumer attitudes toward home buying have perked up in recent months," noted NAHB Chief Economist David Seiders. "But this hasn't yet translated into greater sales activity, and it stands to reason that additional stimulative measures -- such as a temporary home buyer tax credit, FHA modernization and GSE reform -- could have substantial positive impacts on both the housing market and the overall economy."

Regionally, sales activity was mixed in the month of February. The Northeast registered a 40.3 percent decline while the Midwest posted a 6.4 percent decline, the South posted a 5.7 percent increase and the West eked out a 0.7 percent gain.

On a positive note, builders' efforts to reduce the inventory of new homes on the market drove that number down 2.1 percent to a seasonally adjusted 471,000 units in February. However, the supply of units at the current sales pace remained unchanged at 9.8 months and the median length of time that completed homes were on the market rose to 7.2 months from 6.7 months in January.

"This is a truly critical time for housing and the economy, and Congress needs to get right down to business when it returns from recess next week," Dunn said. "Every day that lawmakers fail to act is a missed opportunity for improvement.

For more information on housing data please visit www.housingeconomics.com

Source: NAHB