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January New Home Sales: Record 106 thousand Homes Have Not been Started

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by Calculated Risk on 2/24/2022 12:20:00 PM

Today, in the Calculated Risk Real Estate Newsletter: January New Home Sales: Record 106 thousand Homes Have Not been Started

Brief excerpt:

The next graph shows new home sales for 2021 and 2022 by month (Seasonally Adjusted Annual Rate). Sales in January 2022 were down 19.3% from January 2021 (new home sales were very strong at the end of 2020 and in January 2021).

The year-over-year comparisons will be easier going forward.

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 37 thousand in January, up from the record low of 33 thousand in March through 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 106 thousand homes have not been started – about 1.6 months of supply (grey line) – almost double the normal level. Homebuilders are probably waiting to start some homes until they have a firmer grasp on prices.

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