What's the true supply of new homes for sale?

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Let’s dive into builder speculation and the true supply of new homes .

New Home Sales Did Not Really Rise, They Fell Nearly 7 Percent

Yesterday, in New Home Sales Did Not Really Rise, They Fell Nearly 7 Percent, I noted Inaccurate and misleading headlines on new home sales. 

Census Bureau Report Details 

  • Sales: New Home Sales Sales of new single‐family houses in October 2021 were at a seasonally adjusted annual rate of 745,000. This is 0.4 percent above the revised September rate of 742,000, but is 23.1 percent below the October 2020 estimate of 969,000.
  • Sales Price: The median sales price of new houses sold in October 2021 was $407,700. The average sales price was $477,800.
  • For Sale Inventory: The seasonally‐adjusted estimate of new houses for sale at the end of October was 389,000.
  • Supply: This represents a supply of 6.3 months at the current sales rate. 

For Sale Inventory

The “For Sale” inventory is reportedly 388,000 not adjusted, (389,000 seasonally-adjusted). 

As one of my readers also noted, those homes are not really available. 

True Inventory 

  • 388,000 Total 
  • 245,000 Under Construction
  • 106,000 Not Started
  • 34,000 Finished 

The true supply is 34,000 but if you want to be liberal, then add in those under construction.

245,000 homes under construction is a historically high number. So is the total, but the total is misleading.