New Home Activity

After looking at Used Home Activity, it's time to see how the New Home market is faring.

 New home sales continue to be depressed due to the intense competition from the used market.  The new home market has seen a decent summer averaging over 20,000 and comparing favorable to last years market.  Unfortunately, at this pace, new home sales for 2011 will be the lowest on record.

 Looking at sales from a longer term perspective, the last couple of years have been record lows.  It's looking like another year of about 300,000 sales.  Certainly a far cry from the bubbles top at 1,400,000 sales.

Fortunately, builders have refrained from starting many homes resulting in a months supply of around 6.

The bright spot in the new home market is the lack of inventory.  Eyeballing the above chart, it looks like there are about 60,000 finished homes on the market and about another 60,000 under construction.  If sales can maintain a 20,000/month clip it won't take too much to whittle away at that inventory.  That would set the stage for builders to focus on presales which are a much more profitable product for them, rather than specs.