Inventory for sale rose in all regions, was near all-time highs in the South, spiked in the Midwest to the highest since 2008.

By Wolf Richter for WOLF STREET.

The big homebuilders, who have to build and sell homes to stay in business, have been adjusting to the new reality for nearly four years: The median price of new single-family homes sold in July declined by 1% from a year ago, and by 8.2% from two years ago, and by 14% from the peak in October 2022, to $393,800, the lowest since September 2021 (blue in the chart), according to data from the Census Bureau today.

But prices do not include the incentives and the substantial costs of mortgage-rate buydowns that homebuilders use to prop up their sales. Homebuilders include these costs in the average selling prices they report in their financial statements. But they’re not reflected here in the data from the Census Bureau. The data here reflects the prices that are written into sales contracts.

The three-month average median price, which irons out some of the monthly squiggles, fell by 1.5% year-over-year and by 7.2% from two years ago, to $404,400, the lowest since October 2021 (red).

In this environment, the big homebuilders, in order to keep their revenues up and protect or gain market share, have reduced price points, piled on incentives, and bought down mortgage rates, and it has reduced their gross margins substantially, crushed their net profits and share prices. Shares of the two biggest builders, DR Horton and Lennar, have plunged by 25% and 52% respectively since mid-September 2024.

Sales of new single-family homes at all stages of construction fell by 5.7% year-over-year in July, to 55,000 homes. Compared to July 2019, sales were down by 9%.

Three-month average sales fell by 0.6% from a year ago, the seventh month in a row of year-over-year declines.

Of those total sales, 63% occurred in the South and 28% in the West (91% combined). The remaining sales occurred in the Northeast and Midwest.

Inventory of single-family homes at all stages of construction jumped to 495,000, the fourth month in a row of month-to-month increases.

The decline in sales and the increase in inventory so far this year roughly track the increase in mortgage rates.

Compared to July 2019, inventory for sale has soared by 71%.

Regionally, 61% of this inventory was in the South (with 63% of the sales), and 21% was in the West (with 28% of the sales).

These new additions to the US housing stock are precisely what the housing market needs the most, and homebuilders are building it. They’re are sitting on 9.6 months of supply at the current rate of sales. Build them, and they will come – maybe, if the price is low enough and the incentives high enough.

Inventory of under-construction homes dipped to 262,000 homes, down 10% from a year ago. The dip occurred in part because homes were completed, and moved into the next category, completed homes for sale, which rose.

Compared to July 2019, inventory was up by 32%.

Under-construction inventory for sale is what is in the construction pipeline, and is for sale, but hasn’t been sold yet. Homebuilders have quite a bit of capital tied up in this inventory and are motivated to sell it.

Inventory of completed homes for sale rose to 114,000 after getting sold down from the very high levels in December.

Compared to July 2019, inventory was up by 50%. Compared to July 2022, inventory has soared by 170%.

Builders have a lot of capital tied up in these largely move-in ready “spec homes” and are very motivated to sell them.

Inventory & sales by region.

A map of the four Census regions is below the article at the top of the comments.

In the South, inventory for sale rose to 301,000 new single-family homes at all stages of construction.

Compared to the all-time record in July last year, inventory was down by 4%. Compared to July 2019, it was up by 73%. This is a gigantic amount of inventory that homebuilders have to sell.

But sales fell by 6% year-over-year and were down by 9% from 2019. Homebuilders are sitting on nearly 10 months’ supply.

In the West, inventory for sale rose to 103,000 new single-family homes.

Compared to July last year, inventory was down by 6%. Compared to July 2019, it was up by 18%.

Sales were unchanged year-over-year and down by 15% from 2019. Supply rose to 9.4 months at the current rate of sales.

In the Midwest, inventory for sale jumped by 18% year-over-year, by 60% from July 2019, to 59,000 new homes, the highest since 2008. Bring on the supply!

Sales dropped to 4,000, rounded to the nearest 1,000 by the Census Bureau, providing for large rounding errors. On this basis, sales plunged by 50% and supply soared to nearly 15 months.

In the Northeast, inventory for sale rose 3% year-over-year and by 14% from 2019, to 33,000 new single-family homes.

The Northeast is a small area with big densely populated cities where multifamily construction (condos and apartments) plays a big role, rather than single-family construction.

In case you missed it: Oh Dear, Condo Prices Fell by 15% to 33% in 33 Bigger Markets, Some Below 2006 Levels, as Historic Condo Bubbles Deflate

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