Is Housing Stock Meeting Demand?

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Home Price Slowdown: Cause for Concern?
Home Price Slowdown Cause for Concern


Housing completions increased by 2.4% month-over-month in August 2019, up to a seasonally adjusted annual rate of 1,294,000, 5% higher than the August 2018 rate of 1,232,000, according to the latest Residential Construction Report from the U.S. Census Bureau. First American Deputy Chief Economist Odeta Kushi notes that this increase represents new net supply added to the housing stock.

“Further increases in housing construction may be on the way as well,” Kushi said in a statement. “Residential construction jobs increased 3.9 percent between August 2018 and August 2019. More people at work in residential construction signals that housing construction is likely to increase in the months ahead, reinforcing reports that builder confidence increased in September, even in the face of cost challenges.”

Privately‐owned housing starts in August were at a seasonally adjusted annual rate of 1,364,000.  This is 12.3% above the revised July estimate of 1,215,000 and is 6.6% above the August 2018 rate of 1,279,000.  Single‐family housing starts in August were at a rate of 919,000; this is 4.4% above the revised July figure of 880,000. The August rate for units in buildings with five units or more was 424,000.

“The total supply of existing homes for sale nationwide as a percentage of the occupied residential inventory, a metric known as inventory turnover, started the year at 1.7%, and has steadily increased to a level of 2% in July 2019,” Kushi continues. “In other words, only 200 homes in every 10,000 are for sale. While an improvement, this is well below the historical average of about 250 in every 10,000.”

“The lack of existing homes for sale is supportive of new construction,” she adds. “The month-over-month surge in single-family housing starts to a pace of 919,000 SAAR is an improvement towards meeting this demand, but still falls short of the 1.2 million units that would be needed to meet the increased demand stemming from household formation.”





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