Inventory of new homes drops below 160k for the first time   

The absolute inventory of new homes continues to fall and is now at 158 thousand (seasonally adjusted); lower than inventory levels in the 1960's. Seasonally adjusted new home inventory fell to 6.0 months of supply in November the lowest level since March 2006. 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) and perhaps we are nearing a point where this is possible. The vertical bars in the graphs represent recessions.