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Record Low New Home Sales and Construction Inventory

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Housing Markets

Record Low New Home Sales and Construction Inventory

Unwavering market demand is met with far too little supply


October 27, 2021
New home under construction
Image: Stock.adobe.com

After a boom in new home sales during the first months of the pandemic, rates are steadily declining year-over-year with an inventory supply just above the record low of 33 thousand, according to the CalculatedRisk Newsletter.

New home sales in 2021 are expected to finish below the total 2020 sales rate as a result of rising new home prices and slowed stages of construction with material backlogs and labor shortages.

Sales of new single‐family houses in September 2021 were at a seasonally adjusted annual rate of 800,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 14.0 percent above the revised August rate of 702,000, but is 17.6 percent below the September 2020 estimate of 971,000

Although the new home sales rate for September, at 800,000 on a seasonally adjusted annual rate basis (SAAR), was above consensus expectations of 760,000 SAAR for September, sales were still down 17.6% year-over-year - since sales increased sharply following the early months of the pandemic.  Also, sales in June, July and August were revised down.

The inventory of completed homes for sale was at 36 thousand in September, just above the record low of 33 thousand in March, April, May and July 2021. That is about 0.5 months of completed supply (just above the record low).

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