Glut of New Houses for Sale in the South Is Bigger Even than during the Housing Bust. The Glut in the West Gets Close thumbnail

Glut of New Houses for Sale in the South Is Bigger Even than during the Housing Bust. The Glut in the West Gets Close

By Wolf Richter

Estimated Reading Time: 2 minutes

Prices Are Still Way too High. Something has to give.

Yesterday, we looked at the surge of new completed “spec” houses for sale, and at the surge of new houses for sale at all stages of construction, for the US overall. Now we’ll look at at new houses for sale in the four regions of the US.

In the South – the largest region, with a population of 133 million, see map below – has the most inventory of new houses ever, surpassing even the astronomical levels on the eve of the Housing Bust, just before it all fell apart.

Since June 2024, new houses for sale in the South have surpassed the high of August 2006. In June, there were 293,000 new houses for sale (compared to 291,000 in August 2006). Since then, the inventory of new houses for sale has further ballooned and in October reached 304,000, and has remained in that range through December (301,000). Since December 2019, inventory has exploded by 76%. This is a massive amount of inventory of new houses for sale.

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But sales of new houses in the South in 2024 edged down a hair from the prior year, to 411,000 houses sold, and was down by 13% from 2020 and by 9% from 2021, but was up by 3% from 2019.

Those sales were reasonably decent, thanks to the large-scale incentives, including mortgage-rate buydowns that homebuilders have been using to stimulate demand.

So it’s not that sales have collapsed like sales of existing homes – they haven’t – but that sales lagged far behind the speed with which homebuilders put inventory on the market over the past several years, and now there’s this glut of houses for sale.

So supply of new houses for sale, at the current rate of sales, has pierced the 10-month range. To iron out some of the big monthly squiggles, we look at the three-month average. Seasonally, the peak supply period is in November through January in this three-month average. Beyond seasonality, the trend is clear, with supply having about doubled from the pre-pandemic range:

Homebuilders offered incentives amounting to 10% of the sales price on average in Texas and Florida to get the inventory moving, according to the most recent Burns Homebuilder Survey. And that’s clearly not enough to get the inventory moving.

Here is a map of the four Census regions:

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The West.

In the West – the second largest Census region, with a population of 80 million – a similar problem is piling up. Inventory of new houses for sale surged to 119,000, the highest inventory since December 2007, not far below the peak in June 2007 early on in the Housing Bust, and up by 35% from 2019:

But sales have been anemic in the West because prices are way too high. In 2024, a total of 157,000 new houses were sold, down by 28% from 2020, and down by 14% from 2019. While annual sales were up from the prior two years, all three years were at the lower end of the scale, with only 2008-2016 and 1990 and 1991 having been even lower…..

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Continue reading this article at Wolf Street.

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