Inventory of new homes for sale continued to build up in January, reaching a supply of 5.2 months at the January sales rate, the U.S. Census Bureau and Department of Housing and Urban Development reported today.
Real estate industry groups have said that a supply of about six months is considered to represent a housing market that is roughly in equilibrium between a buyer’s market and seller’s market – a higher supply tends to represent a buyer’s market while a supply less than six months tends to represent a seller’s market.
The months’ supply estimate is the highest on record for at least the past five years.
Sales of new single-family houses in January 2006 were at a seasonally adjusted annual rate of about 1.23 million in January, the agencies reported, which is 5 percent below the revised December rate and 3.3 percent above the January 2005 estimate.
The seasonally adjusted annual rate is used to project 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 January 2006 was $238,100, or about 6.7 percent higher than the January 2005 median sales price. The average sales price was $291,600, up about 3 percent compared to January 2005. The seasonally adjusted estimate of new houses for sale at the end of January was 528,000.
Statistics are estimated from sample surveys and are subject to sampling variability as well as non-sampling error including bias and variance from response, non-reporting, and under-coverage, the federal agencies reported.
Changes in seasonally adjusted statistics often show irregular movement. It takes six months to establish a trend for new houses sold, the agencies reported. Preliminary new-home sales figures are subject to revision due to the survey methodology and definitions used.
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. Changes in sales price data reflect changes in the distribution of houses by region, size, etc., as well as changes in the prices of houses with identical characteristics.
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