Sales of new single-family homes in the U.S. easily set a record for the May-June period, the Commerce Department reported. Fueled by strong population and household growth, improving economic conditions, a favorable financing climate, and the continued solid investment potential of new homes, sales of new single-family homes hit a seasonally adjusted annual rate of 1.326 million units in June. This rate was marginally below the record 1.337-million unit pace set in May and stood 11.1 percent above sales in June 2003.
"Buyer demand for new homes remains quite strong as job growth proceeds and consumer confidence builds," said Bobby Rayburn, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Jackson, MS, U.S. "NAHB's Housing Market Index, based on our monthly surveys of single-family builders, indicates that the perception of an improving economy is helping drive the market."
NAHB Chief Economist David Seiders added: "The fundamentals behind housing demand are very positive, and it's also likely that home buying in May and June was spurred by expectations of rising interest rates later this year. Ironically, mortgage interest rates are now below the May-June levels, slipping to about 6 percent in recent weeks. While home buying may fade later this year, it now appears that home sales for 2004 will easily surpass the record set last year."
Three U.S. regions registered sales decreases for the month. The Northeast posted a 14.2-percent decline from May. The Midwest dipped 2.9 percent, and sales in the West declined 13.1 percent. The South posted a 9.6-percent increase for the month. All four regions, however, posted second-quarter averages that exceeded the performances in the first quarter of the year.
The inventory of new homes for sale in June was 374,000 units, representing a 3.4-month supply at the current sales pace. "The inventory situation improved during May and June as sales surged, and the supply-demand balance in the new-home market was very, very healthy at mid-year," Mr. Seiders said. "That bodes well for both housing production and home prices in the months ahead."
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