New-home sales for all of 2005 climbed to an all-time high, marking the fifth year in a row of record sales.
The Commerce Department reported Friday that sales of new single-family homes clocked in at 1.28 million units last year, representing a 6.6 percent increase over last year’s 1.20 million units, the previous all-time high.
Sales of new homes as well as existing homes — the biggest chunk of the housing market — have logged records five years running.
In December, new-home sales rose 2.9 percent from November’s pace — defying analysts’ expectations for sales to go down last month.
The roaring housing market has helped to underpin consumer spending and bolster overall economic growth. Looking ahead, economists expect the housing market will slow this year, and there have been increasing signs that the market is starting to lose steam.
The National Association of Realtors, in a report Wednesday, said that sales of existing homes fell by 5.7 percent in December, marking the third straight monthly decline — something that had not occurred since early 2002.
For all of 2005, however, existing-home sales hit a record high of 7.072 million units, up 4.2 percent from 2004.
In Friday’s report, the median price of a new home for all of last year was $237,300, a record high. That median price — where half sell for more and half sell for less — broke last year’s record high of $221,000.
Rapidly rising home prices over the past years has made consumers feel wealthy. They have borrowed against their houses and used that to support their spending, which in turn has helped overall economc growth.
Economists are hopeful that home prices will gradually moderate as the housing market slows and that there will be a safe landing for this important part of the economy. There’s a lurking fear — albeit a remote one among some analysts — that prices could crash in some markets, something that would could pose a danger to the economy’s health.