The supply of homes for sales, based on current sales, fell from 8.8 months to 8.2 months, which represents 197,000 houses, the lowest in over 40 years.
Builders have done a good job limiting supply, as evidenced by the chart below; however, despite the recent increase in sales, the market continues to drag along the bottom and has been unable to reach the low levels established while the tax credit was in place.
Constraints include a lack of consumer confidence in the housing market that has been brought about by weak prices and the heavy supply of late-model foreclosures. High unemployment and worries about layoffs continue to be a problem.
And tight credit standards are also hampering sales.
Until some of these issues are resolved, builders are likely to face an uphill climb enticing potential buyers.
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