July 10, 2023

Home Builders Seeing an Opportunity

The National Association of Realtors released its Pending Home Sales report, and it showed that signed contracts were down by 2.7% in May as opposed to the 0.5% decrease that was expected. April’s report was revised lower by 0.4% and sales are now down 22% year over year.

The drop in signed contracts is directly correlated to the small amount of existing home inventory available. The demand is there, but there were about 3 offers per listing. New listings, according to Realtor.com, are down 25% from last year. Simply put, if there were more homes for sale, there would be more sales.

Speaking of inventory, the National Association of Home Builders released their New Home Sales Report which measures signed contracts on new homes. The report showed an increase of 12.2% in May to a 763,000 unit annualized pace which came in stronger than expectations looking for a small decline. Sales are now up 20% year over year. Builders are selling more homes and seeing more traffic since there is a lack of existing homes on the market.

At the end of May, there were 428,000 new homes for sale, but only 69,000 or 16% were actually completed. Currently, with the pace of sales, there is a 6.7 months’ supply, which is down from 7.6%, but when you consider the number of completed homes, the months’ supply is only 1.1 months.

As seen, there is certainly a lack of inventory. The lack of inventory coupled with high levels of demand is supportive of high home pricing and attracting more builders to put more homes on the market.




By: Jon Iacono
A Family

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