At the end of June, there were 432,000 new homes for sale. At the current pace of sales, there was a 7.4 months’ supply, which was up from 7.2%. Looking deeper into the report, only 72,000 new homes were completed. When looking at the pace of sales vs homes that were completed (move in ready supply), there is only a 1.2 months’ supply.
Also, within the report, there was a lot of demand shown. Builders are selling homes that are not even built yet. 164,000 of the homes sold have not even begun to be built!
Another report from the National Association of Realtors that was released was their Pending Home Sales Report. This report measures signed contracts on existing homes. It showed an increase of 0.3% in June, which was stronger than estimates of a 0.5% decline. Sales are down 16% year over year, which is directly correlated to the lack of inventory and not to a lack of demand. Additionally, new listings are down 26% from last year which does not help the inventory picture.
As reviewed, there is certainly a lack of inventory. The lack of inventory combined with high levels of demand is supportive of home price acceleration. Home prices peaked in June, hit a bottom in December and since January have reaccelerated and are now continuing to increase. The lack of existing inventory is attracting more builders to put more homes on the market to attempt to gobble up the large amount of demand that is prevalent.