WASHINGTON - Sales of newly built, single-family homes declined dramatically in May following the expiration of a popular home buyer tax credit program in the previous month, according to newly released figures by the U.S. Commerce Department. The data show that sales fell 32.7 percent to a seasonally adjusted annual rate of 300,000 units, the lowest number on record since the government started keeping track in 1963.
"While today's numbers are sobering, they were to be expected at the conclusion of the tax credit program and are in keeping with the results of our latest home builder surveys," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "Clearly the tax credits were very successful in drawing potential buyers back to the market. Now we are seeing the lull in activity you'd expect following the program's expiration."
"The big drop-off in new-home sales this May emphasizes how effective the tax credit program was in bringing home buyers back to the market while it was in existence," agreed NAHB Chief Economist David Crowe. "Because many buyers moved quickly to take advantage of the tax credits, sales that would have taken place in May or June were likely pulled forward to meet the program's deadline - which is why we have been projecting softer sales numbers for the second quarter. But once this 'hangover' subsides, we do believe that the improving economy, rising employment, excellent mortgage rates and stabilizing home values will be strong incentives that will encourage home buyers to return to the market."
Sales of new homes declined across every region in May. The Northeast registered a 33.3 percent decline, the Midwest a 23.9 percent decline, the South a 25.4 percent decline, and the West a 53.2 percent decline.
The nationwide inventory of new homes on the market declined by half a percent to just 213,000 units in May; this was the lowest level in nearly four decades. However, because of the slower sales pace, the months' supply of homes rose from 5.8 in April to 8.5 in May.
ABOUT NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 175,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the new housing units projected for 2010.
Source: National Assn. of Home Builders, www.nahb.org
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