New Home Inventory at a Three and Half Year Low

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After a surge in the pace of new home sales in July and August, the monthly growth rate of newly built single-family home slowed during the Fall. While the level of sales remains elevated and at post-Great Recession highs, sales have exceeded construction starts by a historic margin at the end of the summer. This necessitated an increase in starts and some slowing of sales. Nonetheless, the acceleration of sales has left new home inventories at a more than three-year low.

According to the last week’s estimates from the Census Bureau and HUD, October new home sales declined by 0.3% for the month to a 999,000 seasonally adjusted annual rate. This is registered off of upward revisions for August and September to 1.001 and 1.002 million annual sales rates respectively. Despite recent flat growth conditions, the October sales rate was 42% higher than a year ago, as housing demand continues to be supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs. Sales are up 20.6% on a year-to-date basis for 2020 thus far.

Looking back to the spring, the April data (570,000 annualized pace) marks the low point of sales for the current recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January. Sales have mounted a historic growth rate since that time.

Sales-adjusted inventory levels marked a fourth consecutive month below a 4 months’ supply, coming in at 3.3 in October. Overall, inventory levels in October were at their lowest level since July 2017, with a total inventory level of homes for-sale (of homes both started and not started construction) of 278,000. At the cycle peak in December 2018, there were 346,000 new homes for sale. The largest declines have been recorded for completed homes for sale, which have fallen from 77,000 in December 2019 to just 44,000 in October.

Consequently, sales growth has ramped up for new homes that have not started construction, with that count up 100% year-over-year in October. These measures point to continued gains for single-family construction ahead.

Thus far in 2020, new home sales are higher in all regions. Total new home sales are up almost 21% on a year-to-date basis. Sales are 19% higher in the South, 20% in the West, 30% in the Midwest, and 30% higher in the Northeast.



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3 replies

  1. We have a serious need for new affordable homes in my community. Anyone looking to build, invest, develope housing in Colorado please write me. Use the word Housing in the subject line.
    dianecvh@mindspring.com
    Thank you.

    • Re:Housing. Where in Colorado (which community) how much Red Tape is there (time is money). Is there any developed/undeveloped lots,how Afordabal are they? How Afordabal are utility connections and permit fees?All of these things MUST be AFORDABAL before we can even start to talk about Afordabal housing. Manufactured or site built,duplex’s, townhouses,condos or apartments. What price range would be Afordabal house be in your community $? These are just some MUST KNOW answers before any real thinking about this can be justified. DUKE Complete Construction,INC

      • Thank you Duke for your questions.

        My lots are fully developed with all city utilities on each lot with a roll over curb & gutter.

        I have no problem with city support, our community is in need of new affordable homes. Very little “red tape” if all is built to code. Lots for single family homes are ready for houses. Stick built, Modular, Hud, all acceptable with 5/12 roof pitch which is required by city. We already have all three types in this development

        Additional acres need utilities and roads for multi family units. All are lined up and ready, property is already zoned multi family residential.

        Prices depend on what is purchased, this is all discussed with serious buyers.

        Location: Trinidad, Colorado a rural community. We are growing into a Arts community. With a new state park in development and new artist moving into our community we can’t keep up with housing. It is expected to be a much larger town within a couple of years, we are growing fast. Just need to google us and see for yourself. Leave me a phone number where I can reach you if you have any more questions. Thanks again.

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