New single-family home sales burst through the one-million unit threshold for the first time in 2003, hitting 1.085 -million; that figure is up 11.5 percent from the previous annual record of 973,000 in 2002. The figure set new records in three regions. 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, which was not a new record, but nonetheless a leap of 21.5 percent from 2002, according to the NAHB.
The new sales record, along with continued low inventory levels, suggest that though 2004 sales may not equal 2003's output, builders are still selling homes almost as fast as they can build them. Inventory estimates of new homes for sale stood at 374,000 at the end of 2003, a 4.3 months' supply at the December sales pace, according to the National Association of Realtors. Builders started a total of 1,498,500 single-family homes in 2003 and 1,848,400 new homes overall, the most in 25 years, according to Commerce Department figures, up 10.3 and 8.4, respectively, when compared to 2002. The NAR reported existing-home sales will total 6.07 million in 2003, up 9 percent from 5.57 million, the previous record set in 2002.
Looking ahead, interest rates are expected to creep up toward about 6.5 percent by the end of 2004, predicts NAHB chief economist David Seiders. New-home sales are expected to fall 7.2 percent in 2004 and 3.3 percent the following year, according to the Mortgage Bankers Association's latest forecast released in February. Sales of existing homes should slip 5.1 percent this year and 3.6 percent in 2005. Fannie Mae, though, predicts 2004 sales will more closely match 2003's figures. Either way, new homes will likely appreciate an average 3.7 percent for new dwellings this year and about 4 percent in 2005 and 2006, predicts the NAR.