New Homes

Total housing starts increased 17% in May to an annual rate of 532,000, reversing a 13% April decline. Building permits, an indicator of future construction, also increased in May, by 4% to 518,000. Construction of new single-family homes rose 7.5% in May to a 401,000 annual rate, the third straight monthly gain for this series, while new work on multifamily units jumped 62% to 131,000.

Increasing inventory in this economy is not a good thing. There are lots of new home communities out there that already don't list all their inventory. They throw more on the market as they sell some. I call this the shadow inventory. There are too many homes for sale and there are actually more for sale than we actually see. This is a problem. Supply and demand still works. There's way too much supply for the current level of demand and that's why it's a buyer's market. And it's unhealthy. A more balanced market is healthier and better for everyone.