Worried About Another Housing Market Slide? Dont Worry Supply Is Your Side

If you did not know, there was a housing data release today. The release was a report on new home sales, and sales fell by 3.6%.

This release today should not have very much significance. Our outlook, shown below or click here, on the housing market remains unchanged. Some financial new reporters and websites are saying the release was a major cause for the drop in the DOW today. We however believe it did not have that much influence on the DOW, and the markets dropped for other reasons.

This release on new home sales did show that they were much worse than what was expected. New home sales were expected to rise by 2.6%, but instead they dropped several percent.

So why is this housing news nothing to worry about?

Put simply, our research has shown and proves that demand is still rising much faster than supply over the last several months, even last month. Our research revealed:

• Over the past 5 months demand for new homes was 5.97% greater than supply,
• Over the past 2 months new home demand has been 4.38% greater than supply,
• Even thought the rate of demand above supply has decreased, demand for new homes is still higher; over the past 1 month demand was .3% greater than supply,

So in the end the fact that supply decreased at a rate much faster than demand last month means supply was on your side. Due to supply not being able to keep up with demand, the amount of home inventories shall continue to fall and continue to put upward pressures on home prices. Currently, there is a 7.5 months supply of new homes, and it has been steadily falling for the past 6 months.