New home sales fell 4.7 percent in August but the supply of homes started homes and finished homes is the big story. 
Let’s discuss the New Residential Sales report for August 2024.
New Home Sales Details
- New Home Sales: Sales of new single-family houses in August 2024 were at a seasonally adjusted annual rate of 716,000. This is 4.7 percent (±10.6 percent) below the revised July rate of 751,000, but is 9.8 percent (±22.1 percent) above the August 2023 estimate of 652,000.
- Sales Price: The median sales price of new houses sold in August 2024 was $420,600. The average sales price was $492,700.
- For Sale Inventory and Months’ Supply: The seasonally-adjusted estimate of new houses for sale at the end of August was 467,000. This represents a supply of 7.8 months at the current sales rate.
Note the margins of error in these sales numbers.
New Home Sales Since 1963
New Home Sales Since 1963 Details
- New home sales are down 30.1 percent from October 2020
- New home sales are up 38.0 percent from July 2022
- New home sales are about where they were in March of 1973
It’s pretty easy to spin the numbers however you want
New Home For Sale by Stage of Construction
Stage of Construction Details
- Of the alleged 467,000 homes for sales 96,000 have not been started
- 105,000 are finished and the number is rising at the fastest rate since the Great Recession
- 365,000 homes are started or completed. This represents a builder commitment that’s very hard to stop.
Increasing Inventory Notes (Lead Chart)
- Most supply of completed homes since October 2009
- Most supply of started or finished homes since May 2008
- Counting vacant land, supply is the highest since March 2008
The Fed Predicts an Immaculate Soft Landing
Meanwhile, please note my Hoot of the Day: The Fed Predicts an Immaculate Soft Landing
I review all of the jobs and unemployment data. The Fed predicts a soft landing. I don’t.
New home buyers are sitting on the sidelines until they know how far rates are going to fall which is largely based on whether or not a recession arrives. Few people want to buy a home going into a recession. It’s that simple. Right now anyone paying attention realizes that a recession isn’t coming anytime soon. And those really paying attention realize the Fed may have to pull a mea culpa by early next year, when inflation starts to move slowly higher.
Super interesting here– for Mish and others. Freddie Mac reported a decrease in mortgage rates this week in their survey, but rates actually went up. It spawned a ton of misleading news articles that housing demand is surging when the data indicates that it isn’t. The argument is that it wasn’t a statistical quirk but was designed to give Kamala and the Dems a talking point.
https://www.mortgagenewsdaily.com/markets/mortgage-rates-09262024
Imo a chart showing months of supply vs avg mortgage rate over time would be more useful, particularly since 2000. Rates are coming down, granted we won’t see 3% but maybe 4 or 4.5? That might see a feeding frenzy.
awesome analysis
I wonder if by my investing REIT’s if I’m part of the problem?
The American Dream of children being materially better off than the parents and owning a home have died for the working and middle income labor classes.
See below link why the house with the white picket fence for median household income buyers with no trust fund or family wealth is DOA.
https://listwithclever.com/research/home-price-v-income-historical-study/
You can thank the monetary, financial, and political elites for this.
I saw an article on CNBC where a builder says he’s still making the same margin 6.5% he was 30 years ago.
Now, that’s a Hoot of the Day, a liar, a really bad builder or maybe all three.
Agreed – New home median prices are up 2 to 3 times those of 2000, during one of the worst 22 year stretches of US total employment growth,
ZIRP handed homebuilders an insane gift which they exploited to the fullest, and to their sole benefit (ZIRP could have greatly increased buyer affordability for *years* but builders only used ZIRP to jack offering prices – and their own wealth. (Dopey buyers were complici in their own exploitation).
New home for sale completed (green) is rising above 2019. New home not started (brown) Land/house bought in 2021 when interest was low cost 8%/10% bc Land isn’t considered a good collateral. Land/house in farm land, sprayed with herbicides and pesticides for decades, can cause cancer and birth defects. If there will be a systemic change from buying houses to buying apt prices of a single homes will deflate.
Fairly difficult for a Builder to sell for less then what it cost to Build, then go to the Bank for next loan advance.
Incentives then become on interest rate subsidy or goody enhancements thrown in.
In any case supply houses by me are very quiet and yards are low on stock, so whatever inventory available is not going to be hard to carry until the next upturn.
If a person in construction industry did not scale back as the very obvious slowdown developed then they have not been around very long.
Investors are supposedly bailing out of Florida so if there is a housing crash, we’ll see it there first. It’s the canary in the flooded mine.
https://www.youtube.com/watch?v=G2BZbCbGN0g
Yes, there is a local guy who posts Videos about the down-turn, with charts and a slick RE MAP, showing values and changes in values.
Parts of Florida are down a lot of value already. Like 30% or more.
Insurance affordability/condo association special assessments. Would not touch Florida.
Speaking of canaries, I think I just saw one buzz by me at a rapid clip curtesy of Helene 🌀
‘Buy American’ Policies Don’t Help Americans‘Buy American’ Policies Don’t Help Americans – Bloomberg (archive.ph)
More proof that the average American is B.R.O.K.E. and up to their eyes in debt.
That is the story of the year; B.R.O.K.E.
They’ll probably plow money into subsidizing mortgage rates through their affiliated mortgage arms – rather than cutting prices. That way, the can maintain the illusion that values are holding up. It’s like how multifamily property owners prefer to give away free months’ rent rather than cut the rent, so that show a higher rent roll when they try to sell the properties. Home builders can bury into the sale price a 5-6 discount point mortgage loss to offer a 4.99% rate. Same as a 2.9% car loan. Smoke and mirrors.
Since there never was a shortage of homes (just homes/condos and apartments taken off the market by 0% borrowed money and used as investments by hedge funds and private equity), we would expect the US market to be awash in homes once it is no longer profitable for the investment homes to be kept. We will have homes coming out of our ears shortly.
To say it another way with a question: ?What is the return on investment of homes and apartments taken off the market?
They essentially become stocks.
With negative dividends unless rented.
But … Sale of rental home doesn’t increase supply.
“Since there never was a shortage of homes…”
I know very few people who have as many homes as they’d like, in all the different locales they would like to have one. Ergo: Pretty much textbook definition of “shortage.”
This time around it wasnt people who got the credit to buy. It was the institutions of the rich designed to hide their buying: hedge funds and private equity.
“It was the institutions of the rich designed to hide their buying: hedge funds and private equity.”
No Sh5t, Sherlock! What else is new in the world’s most degenerate Idiotopia?
“The Problem” is not the connected negative value add Idiot classes who are Mickey Mousing around with “credit”, nor any other pointless drivel that the illiterate classes are being are being told to mindlessly and cluelessly obsess over.
But rather: That there is a massive; 100% artificially induced for absolutely NO useful reason at all; shortage of housing. In absolutely every.single.area.where.people.want.to.live. Leading to utterly comical differences between the only two measures with any economic relevance at all: 1)The free market; rock bottom lowest worldwide provider, cost of erecting a given square footage to a given standard, and 2)the current price of what is being sold: Corrected for aging compared to 1).
That delta is completely out of this world. 10-1.Perhaps darned near 100-1 in the worst instances in Pacific Heights and such.
Every single one of those delta pennies are simply transferred; as in stolen; from all those who; in a free country with a free market for housing; would have owned/rented/squatted-in/what-have-you massively more valuable space. For a dramatically lower outlay. Such that: They could have remained massively wealthier, even with the same nominal income. And who could also; given the sheer size of the discrepancy; have been massively wealthier; Even paid nominally substantially Less. Such that, in that case, US companies and workforces could once again have become at least a little more competitive vis-a-vis those blessed to be born in freer and more enlightened places.
But NO: Instead: Every potentially competitive American company now have to grotesquely overpay for EVERYTHING. For absolutely no other reason than to keep the clique consisting of America’s very, very dumbest, most useless, most clueless and most worthless Fed connected leeches, propped up and; entirely artificially and arbitrarily; rendered “wealthy”; by de facto forcing their in-all-and-every-way-superiors to grotesquely overpay useless idiot little them for such nonsense as “rent”, “mortgage interest”, “commissions”, “legal”-blah-blah and all the rest of the current pathologies existing for zero other reasons than robbing the competent to enrich the incompetent connected. And, which in the process guarantees that America will never again be anything other than the significantly-worse-than-Venezuela basket-case dump of a garbage-pile without any positives whatsoever, that it currently is.
Sounds like you’ve been brainwashed by wolf. There absolutely is a shortage of houses and housing units in Massachusetts. There is no ‘shadow’ inventory here about to come on the market to save the day. A lot of it has to do with Mass. being a magnet for migrants.
I differ, and you lost the argument the minute you said “migrants.”
Buh…but they ate my cat!
Haiti is known for voodoo and animal sacrifice…..not out of realm of possibilities….just saying…real issue how dare they dump 20,000 on a working class city 60,000…no way we can assimilate or afford
There is a “shortage” of housing in MA b/c of several factors:
1) Regulations (Permitting, zoning, “affordable” or “low income” housing gov’t dollars wasted i.e. kickbacks for connected RE buddies)
2) NIMBYism (conservation districts, zoning)
3) Taxes (state + federal taxes, any housing subsidy in any form)
All three are basically just corruption and working against the free market. You elect idiots, you get idiocracy!
Number four.. the importation of tens of thousands if not hundreds of thousands of foreign Nationals into Massachusetts.. of course many of this population is subsidized by the federal government limiting the ability of the locals to afford housing.. complete Insanity we don’t get a grip on legal and illegal immigration into this country we will never get out of this mess.. my humble opinion.. LOL