New Home Sales Drop Slightly In November

While the seasonally adjusted sales rate decreased slightly in November, attractive mortgage rates and strong house price performance continued to drive new homes sales toward a predicted record year of more than 1 million units for the first time, according to the National Association of Home Builders (NAHB).

The Commerce Department reported a seasonally adjusted annual rate of 1.082 million units, a dip of 2.4 percent from October’s revised rate.

“Builders have seen an extraordinary year and builder confidence across the country continues to be upbeat,” said Kent Conine, president of NAHB and a home and apartment builder in Dallas. “The environment for housing appears strong heading into 2004.”

“Some slowdown in sales was expected toward the end of the year,” said NAHB Chief Economist David Seiders. “The bottoming-out of mortgage rates around mid-year stimulated buying by so-called ‘fence sitters’ in June and during the third quarter, shifting some demand into those months from the fourth quarter of the year. We’re projecting 1.084 million home sales for the year as a whole, the first time we’ve crossed the million-unit threshold, an increase of 11 percent over 2002’s record.”

Three regions registered declines for the month. The Northeast, Midwest and West posted 6.5 percent, 10.1 percent and 1.3 percent declines, respectively. The South registered a modest 0.4 percent increase over the month before.

The inventory of new homes for sale in November increased slightly to 363,000 units, a 4.1-month supply at the current sales pace but low by historical standards.