Home builders continued to shed inventories in May, cutting the number of unsold homes by 0.5% to 213,000, the lowest level in 39 years. In the past year, inventories are down 27%, while sales are down 18%.
The inventory of unsold homes represented an 8.5-month supply at the depressed May sales pace, up from 5.8 months in April and the highest in nearly a year.
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Their YOY sales/inventory numbers look pretty good, IMHO.
I think the low sales are largely due to the fact there is very little new inventory. In the past few years, builders have been pulling the fewest permits and have had the lowest start rates we’ve seen in decades, IIRC. It’s no surprise they aren’t selling what doesn’t exist.
I think what extra new inventory does exist is in very remote or undesirable locations and will essentially have to be given away or bulldozed.
The fact that builders are not ramping up permits and starts is something we should all be paying attention to. They’ve been doing this a long time, and if they aren’t building, chances are they don’t believe the “recovery” myth.
I see no reason to believe things will get better from here on out.
