New Home Sales: Record 109 thousand homes have not been started

Sales, year to date in 2021, are 4.4% below sales in 2020, and new home sales in 2021 will finish solidly below sales in 2020 – since sales in 2020 finished strong.

This graph shows new home sales for 2020 and 2021 by month (Seasonally Adjusted Annual Rate).

The year-over-year comparisons were easy in the first half of 2021 – especially in March and April. However, sales will likely be down year-over-year for the remainder of 2021 – since the selling season was delayed in 2020.
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The next graph shows the months of supply by stage of construction. “Months of supply” is inventory at each stage, divided by the sales rate.

The inventory of completed homes for sale was at 38 thousand in October, just above the record low of 33 thousand in March, April, May and July 2021. That is about 0.6 months of completed supply (red line). This is about half the normal level.

The inventory of new homes under construction is at 3.9 months (blue line) – well above the normal level. This elevated level of homes under construction is due to supply chain constraints.

And a record 109 thousand homes have not been started – about 1.8 months of supply (grey line) – almost double the normal level. Homebuilders are probably waiting to start some homes until they have a firmer grasp on prices.