New home inventory remains low   

The absolute inventory of new homes continues to fall and is now at 162 thousand (seasonally adjusted); lower than inventory levels in the 1960's. Seasonally adjusted new home inventory held at 6.6 months of supply in August and has been between 6.5 and 6.6 for the last 5 months. The average months of supply over the last 48 years is 6.2 so even by this measure the housing picture is improving. Any recovery in the rate of sales would quickly deplete the low absolute inventory level and lead to a significant increase in housing starts (and freight) but that does not appear likely in the near term. The vertical bars in the graphs represent recessions.