Many home builders have argued that one of the reasons that housing activity has been weak recently is that there has been limited supply of available homes for sale. When they make that argument, they probably rely on the chart below. It shows that the number of new homes for sale in the U.S. is still at its lowest levels since the 1960s.
I tend to prefer existing home sales data over new home sales data because existing home sales represent a significantly larger share of sales volume. The existing home sales data doesn’t go back as far as the new home sales data, but for the numbers that we do have, the existing home sales data shows a more favorable picture of housing supply.
Supply of existing homes for sale is well below peak levels hit in 2007, but roughly in line with the quantity of homes for sale in the early 2000s. Judging by the existing home sales numbers, potential home buyers should have sufficient merchandise to choose from.
