America's Extremely Tight Supply Of Homes Got Even Tighter

Business Insider

Moments before, we saw that January new home sales were up 15.6 percent month-over-month (MoM).

And significantly, supply decreased to 4.1 months supply at current sales pace compared with 4.8 months in December, and 5.3 months a year ago.

The months' supply figure was down 14.6 percent MoM, and 22.6 percent year-over-year (YoY).

The number of homes however stayed flat at 150,000 in January, and was up from 149,000 a year ago.

Paul Diggle at Capital Economics writes that today's data shows that "supply conditions are extremely tight" and that home price gains should pick up this year.

"Indeed, taking new and existing homes together, the relationship between the months’ supply of unsold homes and house prices points to an acceleration in the pace of house prices gains in the year ahead."


Bill McBride at Calculated Risk, takes a longer term look and writes that new housing supply is now in the "normal range":


America's largest homebuilder D.R. Horton has previously said that it will "thrive" as the housing market sees limited supply, according to Reuters.

Meanwhile, a decline in inventory (both new homes and existing) was one of the key reasons that Bank of America's Michelle Meyer hiked up her 2012 home price projection to 6.4 percent, and raised her 2013 projections to 4.7 percent.

This along with the S&P Case-Shiller home price report that came out earlier today shows that the U.S. housing market is looking at a good year.



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