Washington, DC, January 26, 2007--Sales of new homes jumped by 4.8% in December to a seasonally adjusted annual rate of 1.12 million, the highest level since April, the Commerce Department reported Friday.
Warm weather, low interest rates and aggressive discounting by builders boosted sales far beyond the 1.07 million rate expected by economists.
Sales in November were also revised higher to a 1.069 million pace from 1.047 million earlier. Sales have risen in four of the past five months after bottoming at a 979,000 annual pace in July.
Compared with December 2005, December 2006 sales were down 11%.
For all of 2006, sales plunged 17.3% to 1.061 million, the largest percentage loss since 1990. It was the weakest sales year since 2002, when 973,000 new homes were sold.
In December, the number of unsold new homes on the market fell 0.9% to 537,000, the fewest since January 2006. That represented a 5.9-month supply at the December sales pace, the leanest inventory since last January.
The sales gains in December were the strongest in the regions that enjoyed unseasonably warm temperatures. Sales rose 27% in both the Northeast and the
Midwest, while sales were flat in the South and fell 4% in the West.
The median sales price of $235,000 in December was down 1.3% compared with a year earlier.
Home builders have piled on incentives, including offering free vacations and new cars, to sell homes and reduce inventories. Such incentives are not subtracted from the sales price reported to the government.
Sales are reported when a contract is signed, not at the closing of the sale.
Home builders have reported a large increase in cancellations in recent months.
Cancellations are not reflected in the government data, so the reported sales are likely overstated.
