region bucks housing trend

**got this from the press enterprise newspaper today....
Region bucks housing trend
NEW-HOME SALES: The U.S. market is slumping, but the Inland Empire is posting record numbers.
10:40 PM PST on Friday, March 24, 2006
By LESLIE BERKMANThe Press-Enterprise
Sales of new homes nationwide dropped about 13 percent last month from the prior February even though home construction continued at a near record pace, pushing the unsold inventory of new homes to an all-time high, the U.S. Department of Commerce said Friday.
The slumping national new-home market contrasts sharply with the Inland Empire, which last month posted the strongest February on record for new-home sales in Riverside County, and the second strongest in San Bernardino County.
Riverside and San Bernardino counties together have less than a six-week supply of unsold new homes, according to Metro Study, a Riverside consulting firm. Nationally, the stockpile of 548,000 new housing units would take six months to absorb at the current sales rate, according to the Department of Commerce.
Analysts nonetheless see signs in the Inland Empire and across the nation that the once frenzied market is cooling as prices and interest rates rise, making houses less affordable. In San Bernardino and Riverside counties, home values are rising at a slower pace and homes are taking longer to sell.
In San Bernardino County, prices are rising at a 28 percent annual rate, down from 30 percent in October. Riverside County is averaging 10 percent appreciation now, down from a peak of 31 percent in May 2004, according to DataQuick Information Systems, a company that tracks housing trends.
In the fall, Inland builders sensed a change in the marketplace and started to slow construction to prevent a build up of unsold houses, said Metro Study director Steve Johnson. Also, the region's job growth has fueled home buying, as has the greater affordability of Inland homes compared to homes on the coast, he said.
Riverside County saw 1,932 new homes sold in February, compared with 1,601 a year earlier. In San Bernardino County, 734 homes were sold, the most for the month since 764 homes were sold in February 1989.
Pat Van Daele, chief executive of Riverside-based Van Daele Homes, said the company has closely watched sales, starts and inventory levels for the last six months. He said since fall, his company has reduced the number of new homes it offers for sale by 25 percent in each new phase to reflect slower sales. He said he believes his competitors have done likewise.
Still, new-home sales locally and nationally remain brisk from an historic perspective and it is uncertain that the crash some real estate experts have predicted will materialize.
"There are an awful lot of analysts and think tanks out there telling everybody in the world the sky is falling, and they have been consistently wrong," said John Karevoll, an analyst with DataQuick.
Karevoll questioned the Department of Commerce home-sales statistics, which he said are based on a small sampling projected over a national market. February is an extremely slow month and not good for making predictions, he said.
Karevoll and other analysts said the performance of the housing market in March will better indicate the trend.
"One month doesn't count," Alan Nevin, chief economist for the California Building Industry Association, said of the Commerce Department February results. He called the cooling of the national housing market "miniscule."
Chris Thornberg, senior economist for the UCLA Anderson Forecast, also was unimpressed by the reported February drop in national new-home sales.
"What I see is that the overall sales numbers are high, but they do seem like they have peaked and they are beginning to trend down slowly," he said.
The Commerce Department reported that between January and February, new-home sales nationwide dropped by 10.5 percent, which would be the biggest slide in almost nine years.
Steve Berman, survey statistician for the U.S. Department of Commerce, said that finding has a statistically large margin of error. More significant, he said, is that in the 12 months ending in February, the nation's new-home sales declined 13.4 percent.
Berman said concerns about February being an atypical sales month are unfounded because the department's sales numbers are adjusted for seasonal differences so they will project an annual trend.
Berman said, according to his figures, national new-home sales have been declining since reaching a record level in July.
New-home sales in February, he said, represents "a significant drop but still a historically high number. Is the sky falling? Not really."
The Commerce Department's report came on the heels of a report from the National Association of Realtors that in the same month, sales of existing single-family homes and condos rose by more than 5 percent. The sales were attributed to a warmer than usual winter that brought out more buyers.
Esmael Adibi, director of the Anderson Center at Chapman University, suggested that the disparity may be related to affordability.
"With higher interest rates and less affordability, we have been seeing a softening of demand for new homes," he said.