The actual number of new homes on the market fell from 172,000 in April to 166,000 in May, the lowest number since the government began tracking new home sales in 1963.
But sales have been in the basement, and 166,000 actual homes for sales represents a 6.2 months supply. That’s well below the January 2009 high of 12.2 months but in line with the average over the past 40+ years of 6.2 months.
Further, the 166,000 figure is not adjusted for the much larger population we have today versus the 1960s!
But it’s clear that all is not sound with the new housing market. Builder confidence remains very low, explaining the lack of production and apparently tight inventory of new houses.
And competition from distressed sales of late model homes and the shadow inventory that remains over the market are offsetting any tailwinds that might assist new builders.
Still, falling supplies seem likely to set the stage for an eventual recovery in the new home market.
In the meantime, sales of new homes fell 2.1% to an annual pace of 319,000 in May.
Sales aren’t showing any signs of recovering and instead, or holding near the bottom.
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