Providing further evidence that housing is helping lift the economy out of recession, the Commerce Department reported today that sales of newly built single-family homes rose 5.3 percent in February to a seasonally adjusted annual rate of 875,000 units. This increase comes on the heels of a shortfall in January that followed exceptionally strong sales at the end of 2001. The February sales number represents a healthy and sustainable level of activity.

"Rejuvenating consumer confidence and very favorable interest rates on home mortgages have been generating solid buyer demand, as housing continues adding fuel to the economic recovery," said Gary Garczynski, NAHB president and a builder/developer from Woodbridge, Va. "New-home buyers are now taking the plunge at about the same rate they were just prior to the attacks on America, and buyer demand should continue trending upward from here. It's now virtually certain that housing, which represents about 14 percent of national Gross Domestic Product, will make a solid, positive contribution to economic growth in this year's first quarter."

NAHB forecasts indicate that total new home sales in 2002 should nearly equal 2001's record-setting sales of 906,000 units. "Each of these sales will generate an average of $8,900 in local spending by new owners on home-related goods and services in the first year those homes are occupied. And every 100 newly built homes will generate $11.6 million in new income to local businesses and workers, 250 jobs in the local community and another $1.4 million in local government revenues within the first year of construction alone," Garczynski noted. "All together, that's a significant boost for local economies."

Regional home sales patterns have been fluctuating quite a bit in recent months. In February, the Northeast and Midwest reported declines of 10.1 percent and 0.6 percent, respectively, and the South and West posted respective gains of 9.9 percent and 6.7 percent.

"Builders are keeping a tight rein on for-sale inventories - another indication of sustainable strength in the housing market," Garczynski noted. The inventory of new homes for sale rose a single percent in February to a healthy 313,000 units, while the months' supply of homes for sale at the current rate dropped back slightly, from 4.5 to 4.3.

Published: April 1, 2002

Use of this article without permission is a violation of federal copyright laws.