The rate of new single-family home sales in March was about 7.2 percent below the March 2005 estimate, while the supply of for-sale inventory was up about 31 percent, the U.S. Census Bureau and the Department of Housing and Urban Development announced today.
The agencies reported that the seasonally adjusted annual rate of new single-family home sales was 1.21 million in March 2006, a gain of 13.8 percent since February but a decline from 1.31 million in March 2005. The seasonally adjusted annual rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity.
The median sales price of new houses sold in March 2006 was $224,200, down 2.3 percent from the median sales price in March 2005; and the average sales price was $279,100, which is 3.8 percent below the March 2005 average.
The seasonally adjusted estimate of new houses for sale at the end of March was 555,000. This represents a supply of 5.5 months at the current sales rate. In February the supply was 6.3 months and in March 2005 it was 4.2 months.
A supply of about six months is generally considered to indicate a market that is in a rough equilibrium between a buyer’s market and a seller’s market – a lower supply indicates a seller’s market while a higher supply indicates a buyer’s market.
The statistics are estimated from sample surveys and are subject to sampling variability and non-sampling error including bias and variance from response, non-reporting, and under-coverage, the agencies reported.
Changes in seasonally adjusted statistics often show irregular movement, the agencies also noted, and it can take six months to establish a trend for new houses sold. Preliminary new-home sales figures are subject to revision. The survey is primarily based on a sample of houses selected from building permits. Since a “sale” is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued.
An estimate of these prior sales is included in the sales figure. On average, the preliminary seasonally adjusted estimate of total sales is revised about 3 percent.