New-Home Sales Gain Steam as Inventory Rises From Record Lows

Single-family home sales rose gradually in January to a seasonally adjusted annual rate of 670,000, but months of supply dropped to 7.9 months from 8.7 months in December 2022, Bill McBride reports in the CalculatedRisk Newsletter. Still, housing supply is inching back toward pre-pandemic levels after reaching a record low in October 2020.

Total inventory of completed for-sale homes is more than double the record low of 32,000 reached in 2021 and early 2022, while the inventory of homes under construction remains high at 280,000.

There are 1.2 months of completed supply. This is close to the normal level.

The inventory of new homes under construction is at 5.0 months. This elevated level of homes under construction is due to supply chain constraints.

And about 1.6 months of potential inventory have not been started - about double the normal level. Homebuilders are probably waiting to start some homes until they have a firmer grasp on prices and demand.

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