New Homes Sales up in December
The number of new homes sold in December rose more than expected, suggesting that the depressed market could be turning a corner, but sales for all of 2006 still took their biggest annual slide in 16 years, according to government figures released yesterday.
December sales rose 4.8 percent, the biggest monthly gain since April, to a seasonally adjusted annual pace of 1.12 million new homes sold, the Commerce Department said. For the full year, new-home sales fell 17.3 percent, the biggest decline since 1990, as the housing market suffered a sharp contraction after five years of blazing growth.
The new-home sales numbers came one day after other figures showed that sales of previously owned homes fell 0.8 percent in December after two months of modest gains, capping the steepest annual drop in that part of the real estate market since 1989. For the year, sales of existing homes fell 8.4 percent.
"We knew the year was going to be bad," said David Seiders, chief economist of the National Association of Home Builders. "There was no big surprise there. The real story is that toward the end of the year, sales did stabilize and even move up a bit."
The November and December sales figures were boosted by unusually warm weather, after inclement weather kept October numbers down, Seiders said.
New-home sales in December rose in three of four regions of the country, compared with November. Sales were up 27.3 percent in the Northeast, 26.6 percent in the Midwest and 0.3 percent in the Southeast, which includes the Washington region. Sales fell 4.4 percent in the West.
Nationally, the median price of a new home fell 1.5 percent in December, to $235,000 from $238,600 a year earlier. For the year, the median new-home price rose 1.8 percent, to $245,300 from $240,900.
The down year has translated to lower profits for home builders. To lure back buyers, builders cut prices somewhat, but also offered sweeteners that included free upgrades and finishes, help with closing costs and lower mortgage rates through their affiliates.
Sagging sales and a slew of contract cancellations also caused builders to cut back on construction. Builders delayed starting projects; walked away from land deals, leaving deposits on the table; renegotiated lesser deals with land sellers; and converted new home projects into rentals. These steps all helped to reduce inventory.
Thomas S. Bozzuto, chief executive of the Bozzuto Group, which builds condominiums, townhouses and single-family houses in the Washington-Baltimore region, said he believed the new-home market may have touched bottom and will gradually begin to recover, though not to previous sky-high levels.
"We're not going to see an instant turnaround or a quick recovery," Bozzuto said. "But I think it has bottomed out."
Bozzuto said traffic at local developments built by his firm has picked up since the beginning of the year after what he described as a "very bad" autumn and early winter.
He said that although buyer traffic had increased, it was nowhere near the boom levels of 2004 and 2005.
Bozzuto said his company responded to the market contraction by delaying some projects, turning two condominium developments to rentals and restructuring some land deals with sellers.
By Daniela Deane Washington Post Staff Writer