New Home Sales Hit Another Peak

Sales of new homes inched their way to a new record high in May and it looks as if 1998 will be a banner year, eclipsing the previous sales record set over 20 years ago.New home sales rose from a seasonally adjusted annual rate of 887,000 units in April to 890,000 units in May, according to a U.S. Commerce Department report. [Click here to see the chart.] At this year's current pace, new home sales could top the previous record of 819,00 units sold in 1977, according to Michael Carliner, an economist with the National Association of Home Builders. Last year, new home sales totaled 804,000 units. The Commerce Department report shows that the inventory of unsold homes remains low, and it confirms reports by homebuilders that they are having difficulty keeping up with demand, Mr. Carliner said. In May, 78% of the new homes sold were sold before the foundation was laid or during construction. The remainder were sold once construction was completed. The NAHB is also finding that the increase in new home sales comes mainly in the "built-for-sale" category, as opposed to custom homes built on an owner's lot. This trend reflects homebuilders' ready access to construction financing and a recovery in the East and West Coast housing markets, the NAHB economist said.