There is a perfect storm brewing in the residential real estate market, just in time for the summer buying season.
The inventory of new homes on the market continues to rise, reaching its highest level since 2008 in May, with a total of 481,000 single-family homes available. At the same time, there are currently almost 100,000 completed homes sitting on the market waiting for buyers, the most in over 14 years.
All of this means that it would take 9.3 months to work through all of this inventory, another recent high.
It should be no surprise, then, that builders are starting to slow down new construction projects.
Taken together, this is another barometer of volatility that we like to keep an eye on. Excess housing inventory and reduced construction activity could both end up dragging down overall economic activity, as residential investment falls off and consumers choose to hold off on large purchases, like new homes.
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