New home inventories rise and sales fall in April
According to the U.S. Census Bureau and the Department of Housing and Urban Development, single-family new home inventories increased to 268k in April (seasonally adjusted). Inventories are at the highest level since July 2009. April’s new home inventories were 27k (11.2%) above the prior-year level of 241k. New home inventories still remain somewhat low by historical standards, but are closing in on longer run average inventory levels (~340k).
The growth in inventories in the last year (seasonally adjusted) has been driven by homes not yet started (+16k), more so than by homes under construction (+10K) or homes completed (+1k).
New home inventories increased slowly during the first 9 months of 2016, from 237k in January to 242k in September, but then jumped to 256k by December, an increase of 19k from January. In 2015, inventories rose 27k; from 207k in January to 234k in December. Inventory levels increased 23k throughout 2014, peaking at 212k in December, and rose 38k in 2013, to 187k by December. The last year of flat inventories was 2012, when the absolute inventory of new homes remained within a consistent range of 142k – 150k.
Seasonally adjusted new home inventories increased to 5.7 months of supply in April, up from from 5.1 months a year ago. Sales of new single-family houses decreased to 569k (seasonally adjusted annual rate), down 11.4% from revised prior month sales and up 0.5% from prior year. Full-year 2016 sales of 561k were up 12.0% from 501k in 2015. Year-to-date 2017 sales are up 11.3%
Full year 2015 new home sales were up 14.6% over 2014. For the full year 2014, new home sales only grew by 1.9% to 437k units. The months of supply figure remained below 5 months between February 2012 and June 2013, but was 5.0 or more from that point through the end of 2014 with only one exception. In 2015, eight months were at 5.0 or greater months of supply, including each of the last 7 months of the year. In 2016, only one month (July) was less than 5.0. The average months of supply over the last 50 years is 6.1, so current new home inventory remain below “normal” levels. For the 9-year period of 1997 through 2005, the inventory level averaged 4.1 months with relatively little volatility, despite the dot-com boom and subsequent recession, and we are above that level today. The vertical bars in the graphs represent recessions.