A Huge Wave Of Housing Supply Will Soon Hit The Market

A look at housing starts and homes under construction shows a welcome wave of supply is on the way.

New homes for sale data from St. Louis Fed, chart by Mish

 

New Residential Sales 

The New Home Sales report for January shows sales of new single‐family houses in January 2022 were at a seasonally adjusted annual rate of 801,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 4.5 percent below the revised December rate of 839,000 and is 19.3 percent below the January 2021 estimate of 993,000.

Those are seasonally-adjusted annualized numbers. Actual sales were a mere 64,000 as shown in the following chart.

New Home Sales Seasonally Adjusted and Unadjusted

New homes sales data from St. Louis Fed, chart by Mish

Builders sold 64,000 homes in January, but the more relevant number is 258,000 homes "for sale". Those are homes started but not sold. 

There are another 39,000 homes that are finished and for sale.

Housing Starts, Permits, Completions

Housing starts data from St. Louis Fed, chart by Mish

 

Housing starts are another way of looking at things. The numbers are seasonally-adjusted and annualized, but the building has been at an above-trend pace since January 2021.

Supply

The long-term chart of new homes for sale (lead chart) without the seasonal adjustments better shows the coming supply.

And that supply is coming with the stock market falling, geopolitical tensions rising, and mortgage rates the highest in a couple of years. 

This could put a damper on prices, cooling off overheated housing and rental markets.