New home sales were reported today, falling short of forecasts: 342,000 (annualized rate). This means one thing to me: home prices are still too high.
The above graph tracks new home inventory. The number is arrived at by dividing the number of homes available by the most recent monthly sales rate. Although off the highs, this figure is considerably higher than the 20 year average of 5.8 months.
Based on the rebound in mortgage lending rates, it seems that any adjustment to affordability must come through home price. The graph below tracks affordability in terms of monthly mortgage payments.
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