That’s how many new homes were for sale at the end of April—the most since 2008 and the latest sign that the rapid price increases of the pandemic era may soon be over.
A sharp decline in sales last month left the market for new homes far fuller than it was earlier in the pandemic, Census Bureau data showed Tuesday. In fact, it’s been almost 14 years since this many new single-family homes (including those still in the planning or construction phase) have been for sale, the latest evidence that the frenetic seller’s market of the COVID-19 era may be at a turning point.
Early in the pandemic, ultra-low mortgage rates fed fierce competition for the few choices on the market, pushing sale prices relentlessly higher. But now things are swinging in the other direction: mortgage rates have surged, blowing up monthly payments to the point where some prospective buyers are simply walking away.
While the swelling inventory has yet to translate into any price relief—the median price of new homes sold rose to a new high of $450,600 in April—it may only be a matter of time, according to economists. The pendulum could even swing too far in the other direction, causing an economic recession, according to James Knightley, chief international economist at ING.
“Inventory for sale is rising rapidly, which suggests we are moving from an environment of excess demand, seen since the start of the pandemic, to one of excess supply,” Knightley wrote in a commentary. “This is bad news for home prices and economic activity.”
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