Home Sales Weak: The End is Near

New home sales are weak, and existing home sales are past their peak.  What’s even more indicative of a market weakening is the large inventory of unsold homes.

Keep in mind that January weather nationally was milder than normal, February worse than normal.  But much of the work of buying a home happens before the close, so there’s some time lag.  Nonetheless, sales of existing homes are clearly past the peak.

New home sales definitely heading down, and look at the unsold inventory:

About 41% of the unsold homes are platted, but construction has not yet begun.  Most likely, the lots will be left untouched until a buyer comes along.  But the remainder are either under construction (34% of the total) or finished (25%).  The two latter categories consist of homes that HAVE to be sold soon.  So you’re a developer, with homes that you cannot afford to carry for long, a weakening market, and plenty of competition.  What do you do?  How about cut prices?

Business implication:  If you are in the business of selling or building homes, your best days are behind you.  It’s like you’ve just gotten the AARP letter in the mail on your 50th birthday, and you scream, "But I have some good years ahead of me!"  Sure you do, but they won’t be as good as the years behind you.  Sorry, bub.