The homebuilders’ inventory of started but unsold homes is steeply rising as sales drop. It will take price cuts to clear inventory.
New Residential Construction
Yesterday, the Census Department released the New Residential Construction report for June.
- New Home Sales: Sales of new single-family houses in June 2024 were at a seasonally adjusted annual rate of 617,000. This is 0.6 percent (±14.6 percent) below the revised May rate of 621,000 and is 7.4 percent (±15.2 percent) below the June 2023 estimate of 666,000.
- Sales Price: The median sales price of new houses sold in June 2024 was $417,300. The average sales price was $487,200.
- For Sale Inventory and Months’ Supply: The seasonally-adjusted estimate of new houses for sale at the end of June was 476,000. This represents a supply of 9.3 months at the current sales rate.
Note the margins of error in this report, ~15 percent.
New Homes For Sale By Stage of Construction
Allegedly there are 476,000 homes for sale at a seasonally-adjusted annualized rate (SAAR).
However, 100,000 of them have not been started and perhaps won’t for years.
There are 376,000 homes that have been started, of which 102,000 have been completed. It’s the most since the middle of the great recession.
Started and completed homes are much more of a commitment than holding vacant land, and it’s happening just as the economy is slowing rapidly.
New Home Sales Drop Slightly
Yesterday, I reported New Home Sales Drop Slightly, Economists Expected a 3.4 Percent Rise
New Home Sales Since 1963
New home sales are well below the February 1964 report (yellow highlights).
Who can afford homes? Prices are at record levels and mortgage rates are 6.90 percent according to Mortgage News Daily.
Existing Home Sales Drop 5.4 Percent But Median Price Hits New Record
On July 23, I noted Existing Home Sales Drop 5.4 Percent But Median Price Hits New Record
Existing-home sales declined 5.4 percent in June. It was the 23rd decline in 29 months. But the median price hit a new record.
Not that anyone needed more evidence, but that’s another sign of Fed bubble-blowing prowess.
Signs of Severe Credit Card and Auto Loan Stress in Generation Z
The people who most want to buy a house, can’t because they can neither afford a house nor the rent they are paying.
That has been an explicit theme of mine since February.
The economy is slowing and that will hit the zoomers first and the hardest, especially renters. This will have a huge election impact.
I tie the economics and politics together in my post Signs of Severe Credit Card and Auto Loan Stress in Generation Z
great. analysis. thanks
‘New’ houses are a completely different market than ‘existing’ houses. In CT a new house runs about $800k+ while an existing house is about $450K.
It’s the existing houses that are getting snatched up in crazy bidding wars in CT. And contrary to a certain wolf’s opinion, these bidding wars are not ‘amusing anecdotes’ but reality in over half the country.
Why? There is a shortage of existing houses for sale.
Connecticut ? Used to be a great state Not anymore Cost of owning way too high I’ll pass
What can’t be built, won’t be. Sold for cheap eventually to new developers, but when is the big unknown question.
What can be built will be, but sold for beak even as the end goal, but not much more to get it to move. And quickly. Competition will be fierce and overwhelming in some areas.
Economy will suffer as a result. The buyers that need housing, can’t afford it. The ones that can afford it don’t want it. Who does that leave?
Our Government!!!
They will soon be in the rental business, selling business and whatever else they can get their hands on… maybe for housing the ill…Nah… er. Maybe?
If completed are 100K and started and completed are 376K ==> in constructions are 276K. That’s why not started stalled. A cost center doing nothing all day, testing 2007 high for 3Y !!
Duh.
2008 is when all the NINJA mortgage money disappeared, along with the other money.
Sorta like now, only much worse.
America’s becoming a shell of itself. Outward appearance does not match the destruction happening the inside.
The US sealed its fate in the 1960s by removing prayer from schools (Engel v. Vitale, 370 U.S. 421, 1962), The Civil Rights Act of 1964, LBJ’s Great Society (1964, 1965), The Immigration and Nationality Act of 1965, the Viet Nam War (1955-1975) with its still lingering effects, Roe v. Wade 410 U.S. 113 (1973), women’s lib, and all that has politically and socially occurred since. The end of the US is nigh, prepare as inclined. ☮️🔦✝️