August 26th, 2014 Wolf Richter
So now, there’s another aspect of Housing Bubble
2, this time in new single-family homes: dropping sales, swooning prices, and ballooning inventories. Sales of new single-family homes fell 2.4% in July, to a seasonally adjusted annual rate (SAAR) of 412,000, the worst in four months, and those four months had been nothing to brag about. While up 12.6% from a year ago, sales have been languishing, as the chart below shows, near the bottom of the range. By comparison, during the housing construction bubble, new single-family homes were selling at a seasonally adjusted annual rate of well over 1,000,000.
2, this time in new single-family homes: dropping sales, swooning prices, and ballooning inventories. Sales of new single-family homes fell 2.4% in July, to a seasonally adjusted annual rate (SAAR) of 412,000, the worst in four months, and those four months had been nothing to brag about. While up 12.6% from a year ago, sales have been languishing, as the chart below shows, near the bottom of the range. By comparison, during the housing construction bubble, new single-family homes were selling at a seasonally adjusted annual rate of well over 1,000,000.
The inveterate optimists that economists have become were disappointed. They’d expected a rate of 430,000 sales. The median price dropped 3.9% from June and almost 6% from May, to $269,000, and was up only 2.9% from a year ago. But hey, at least year over year, it wasn’t a downdraft. Not yet…. So, on a monthly basis, sales and prices are heading south. These numbers from the Census Bureau are volatile and subject to big revisions; hence, by a miracle, sales and prices might reverse course. But over the longer term, and after revisions, one trend is now becoming glaring: the supply of new homes on the market (green line, right scale) rose to 6 months, from 5.6 months in June. It was the highest – and for builders the worst – level since October 2011: 
Rising supply of unsold homes is the bane of the industry. During the last housing bubble, inventory in terms of months’ supply shot up: as sales declined, new homes were still being planned, built, finished, and put on the market.
Rising supply of unsold homes is the bane of the industry. During the last housing bubble, inventory in terms of months’ supply shot up: as sales declined, new homes were still being planned, built, finished, and put on the market.Read more at http://investmentwatchblog.com/housing-bubble-2-0-ripens-drooping-sales-swooning-prices-ballooning-inventories/#7IIf7JzBHJLCGAep.99
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