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Drowning in Unsold New Homes?

Housing Bubble 2 is showing another side of its personality: ballooning inventories of new single-family homes.

Sales of new single-family homes fell 2.4% in July, to a seasonally adjusted annual rate (SAAR) of 412,000, the worst in four months, and those four months had been nothing to brag about. While up 12.6% from a year ago, sales have been languishing, as the chart below shows, near the bottom of the range. By comparison, during the housing construction bubble, new single-family homes were selling at a seasonally adjusted annual rate of well over 1,000,000.

The inveterate optimists that economists have become were disappointed. They’d expected a rate of 430,000 sales.

The median price dropped 3.9% from June and almost 6% from May, to $269,000, and was up only 2.9% from a year ago. But hey, at least year over year, it wasn’t a downdraft. Not yet….

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