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The homebuilders’ inventory of started but unsold homes is steeply rising as sales drop. It will take price cuts to clear inventory.

Data from the census department, chart by Mish

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

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