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December New Home Sales: Inventory of homes under construction highest since 2007

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by Calculated Risk on 1/26/2022 10:47:00 AM

Today, in the Calculated Risk Real Estate Newsletter: December New Home Sales: Inventory of homes under construction highest since 2007

Brief excerpt:

The next graph shows new home sales for 2020 and 2021 by month (Seasonally Adjusted Annual Rate). Sales in 2021 (762 thousand) were 7.3% below sales in 2020 (822 thousand).

The year-over-year comparisons were easy in the first half of 2021 – especially in March and April. However, sales will be down year-over-year again in January since the sales were delayed in 2020 – and sales in the winter were strong.

The next graph shows the months of supply by stage of construction. “Months of supply” is inventory at each stage, divided by the sales rate.

The inventory of completed homes for sale was at 39 thousand in December, up from the record low of 33 thousand in March, April, May and July 2021. That is about 0.6 months of completed supply (red line). This is about half the normal level.

The inventory of new homes under construction is at 3.9 months (blue line) – well above the normal level. This elevated level of homes under construction is due to supply chain constraints. And 101 thousand homes have not been started – about 1.5 months of supply (grey line) – almost double the normal level.

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