Direxion Daily Real Estate Bear 3x (DRV)

[tw0122]

Inventory piles up. Exactly what the housing market needs.

Homebuilders’ inventories of houses in all stages of construction, including construction not yet started, rose to 475,000 houses in June, the highest since 2008. Supply jumped to 9 months.




So builders are aggressively adding supply to the market, no matter what the market does, and that’s good for the market, there’s nothing like lots of new supply to bring home prices back to reality, the more supply, the better. This supply of new houses ripples across the market for existing houses, as builders are competing with homeowners who want to sell.



Inventory of completed houses jumped to 98,000 houses in June, the highest since 2009. These speculative homes are essentially move-in ready, they have to be sold quickly, builders have tied up lots of money in them, and that inventory is encouraging builders to throw more incentives and mortgage rate buydowns into the fray.

This surge in spec houses, after the trough during the pandemic, is exactly what the housing market needs. People who are frustrated with trying to buy an existing house, can go out and make a deal for a move-in ready new house, at a lower-than-market mortgage rate, and come out with lower payments — and to heck with homeowners that sit on their vacant homes, hoping to run up the price spike all the way, or cling to 2022 prices. Homebuilders have to build and make deals no matter what the market is.