Housing Numbers Inconsistent

Don Hogsett, February 14, 2005

Washington — Home sales remained choppy and inconsistent for a third straight month during December, with the three key components of the broad U.S. housing market heading in different directions.

The biggest slice of the housing pie, existing-home sales, slipped 3.3 percent to a seasonally adjusted 6.7 million units, more than wiping out a 2.4 percent increase recorded in November.

Housing starts improved at a double-digit pace, rising 10.9 percent, to 2 million units seasonally adjusted, but not enough to offset a 12.5 percent drop recorded the preceding month.

New home sales were relatively flat, inching up 0.1 percent, to 1.1 million seasonally adjusted units, holding steady following a steep 13.1 percent slide during November.

David Lereah, chief economist of the National Association of Realtors, said a dip in existing home sales had been expected for the month. “Our sense was that November sales were the peak for the current housing cycle, but activity remains strong. There is no sign of a downturn. Home sales will continue at historically high levels, and 2005 is expected to be the second-best year on record for the housing market.”

After unusually wet weather slammed the brakes on housing starts in November, the forward-looking indicator bounced back again a month later.

David Seiders, chief economist of the National Association of Home Builders, said, “Home building in December was absolutely solid, finishing up the year nicely after some softening in November that was related to bad weather. The level of unused building permits moved up last month, and that is a favorable sign for starts activity as we move forward this year.”

Looking ahead, Seiders forecast a modest 3 to 4 percent decline in starts, resulting from higher mortgage rates.

Housing By Region
Month-To-Month % Change

Source: U.S. Department of Commerce and National Association of Realtors
Northeast 1.4% 5.7% -15.7%
Midwest 1.4 18.8 55.5
South -4.2 10.6 -16.3
West -7.2 7.9 6.3

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