This morning's release of new home sales for the month of March was stronger than expected, but at a level of 300K, it was still near its record low reading of 270K from last month. While actual sales of new homes are still low, we were curious to see how the quantity of sales relates to the amount of inventory on the market. To do this we compared the number of sales to the number of total new homes on the market. We then calculated the 12-month rolling average in order to eliminate any 'noise' in the numbers.
At a current reading of 12.7%, new home sales as a percentage of total new homes for sale is still well below the historical average of 17.7%. However, unlike the actual level of 300K, which remains near record lows, the percentage of sales is comfortably above its record low reading of 9.1% in April 2009. The silver lining here is that although sales remain weak, the supply of new home listings has been decreasing enough so that the glut of available houses on the market is not getting any bigger.