An Insider’s Look Into How Secondary Marketing Evaluates LOs

In this webinar we’ll explore the long-term financial impacts of renegotiations, extensions and fallouts, plus basic guidelines to be viewed as a professional by your secondary marketing department

HousingWire Annual Virtual Summit

Sessions from HousingWire Annual 2021 are going to be virtually streamed on October 25. Register now for FREE to tune into what housing industry leaders had to say this year!

How servicers can access timely, accurate data insights

Learn how to navigate the challenges in today’s market – for example, the need for ongoing, on-demand access to near-real-time data and the ability to access those data insights in a timely and accurate manner.

Steve Murray on new brokerage models, CFPB crackdowns

Today’s HousingWire Daily features a discussion on the emergence of a new brokerage model and the validity behind the concerns against institutional investors.

Real Estate

What builders see in a deeply unhealthy housing market

What does this mean for homebuilders?

HW+ houses

The big news from the U.S. Census Bureau’s May new home sales report is that sales inventory has increased to 5.1 months, which brings the three-month average to 4.63 months. That begins to change the equation for some homebuilders, who were absolutely thriving in an ultra-low-inventory housing market environment. 

As a reminder, when the three-month average for inventory is 4.3 months or lower, builders have the confidence to continue to build. When inventory is between 4.4 and 6.4 months, builders need to see sales growth to continue to build. When inventory is 6.5 months or above, builders will exercise caution and even halt new projects.

Housing-Market


Census: For Sale Inventory and Months’ Supply, The seasonally‐adjusted estimate of new houses for sale at the end of May was 330,000. This represents a supply of 5.1 months at the current sales rate.

The headline monthly supply of 5.1 months is what we saw during decent housing market demand in the previous cycle. So although inventory has increased, it is not at a level of concern. Mother Economics is a serial killer who wants to get caught. She leaves plenty of evidence for those who are interested in discovering her next moves. Tracking the data over many years will show you the way. 

The builder’s confidence index tends to correlate with inventory. Historically speaking, the current level of builder confidence is relatively high. The index shows a parabolic move in 2020 from the lows of the COVID-19 crisis, and has since moderated. Because this index tracks confidence, a somewhat subjective measure, it doesn’t make sense to look at the total levels and compare them to other cycles. The direction of the trend is more valuable than any number. For example, the index may approach 70, which is a respectable number, but when we consider that it peaked near 90, the drop tells what the builder is thinking.

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