US Housing Market: Inventory Crisis and Changing Dynamics Analysis

The US housing market faces a rapidly changing inventory crisis, with existing homes at a low supply and new construction at a high supply level.

### Understanding the US Housing Market Inventory Crisis
* 🏠 The US housing market has been facing a **record inventory crisis** for the past 4 years, with both **existing and new home markets affected**.
* 📉 The existing home market has a sales pace of **3.7 million homes per year**, while the new home market sells **619,000 homes per year**.
* 📊 The existing home market has a month supply of **3.7**, considered very low but increasing from the historic low of **1.6** in January 2022.
* 🏗 The new construction market has a month supply of **9.3**, well above the balanced level of **6.0**, with **80% of inventory** either under construction or not yet started.
* 📈 The total US housing market month supply is **4.5**, the highest since **2015**, with regional variations causing some markets to feel **price pressures**.
* 🏢 In June, **29% of builders cut home prices by an average of 6%**, and **61% used sales incentives like mortgage rate buy-downs**.
* 📉 If completed new home inventory reaches **30%**, price cuts could intensify and construction crews may face **job losses**.
* 🔮 The situation is changing rapidly, with building permits for new homes declining again as **completed inventory rises** and **buyer demand remains subdued**.

US Housing Inventory Crisis: Its Impact on Home Prices

EPB Research

The Truth About the US Housing Market Inventory

The US housing market has been experiencing a record inventory crisis over the past 4 years, but the situation is rapidly changing.

The existing Home Market has a much larger sales volume than the new construction market, but both have seen a significant reduction in demand due to increased interest rates.

At the peak of the housing boom during the pandemic, the existing Home Market had a much higher sales pace than the current rate, indicating a substantial decrease in inventory.

The Nuanced State of US Housing Inventory

The US housing market has a record low of 1.

1 million homes for sale, but the new construction market has one of the highest levels on record at 479,000 units.

The month supply, which considers both supply and demand, is at 3.

3 for new construction, indicating a very tight market for existing homes and an oversupply for new construction.

The existing home market has seen a significant increase in inventory since its historic low in January 2022, creating a somewhat healthier but still tight situation.

The Current State of the US Housing Market

The total month supply of the US housing market has risen to 4.

5, the highest since 2015, indicating a tight inventory situation.

Some specific regional markets are experiencing downward price pressure with a month supply near six, while others are seeing rising prices with a supply as low as three.

The new home market, with a month supply of 9.

3, is well above the balanced level of 6.

0, leading to price cuts, discounts, and sales incentives by builders.

The Shifting Landscape of New Home Inventory in the US

The completed new home inventory for sale in the US is currently at 20%, which is rising and approaching the 30% range associated with intense price cuts and potential job losses for construction crews.

9 months of completed inventory for sale, the US housing market is moving into the range consistent with recessions and construction job losses.

The rising completed inventory is leading to a decline in new building permits as builders are less likely to start new construction projects.

Impact of Market Trends on Home Construction

Home market facing price pressure and increasing inventory, leading to larger price cuts and discounts without a boost in buyer demand.

The decision to halt new building permits and consider laying off construction crews is on the horizon due to the growing inventory.