In June, U.S. new single-family home inventory surged to 9.8 months ‒ the highest level since October 2007 and one of only six such occurrences on record.
Such an elevated supply has historically preceded recessions five out of those six times, highlighting potential risks ahead. A months-of-supply reading above six typically signals a buyer’s market, and at 9.8 months, homebuilders face mounting pressure to cut prices and clear standing inventory.
Data from June shows:
- New home sales rose slightly (0.6%) but trailed expectations, and were down 6.6% year-over-year.
- Median new home prices dropped 2.9% to $401,800, indicating builders are discounting to entice buyers.
Meanwhile, existing-home sales also declined in June, and the broader housing market shows softening momentum. Rising mortgage rates near 7% and economic uncertainty are keeping buyers sidelined and inventory elevated.
This article was written by Eamonn Sheridan at investinglive.com.