• New home sales slid in June. The decline is not a reflection of slower housing demand, but more related to homebuilders putting up fewer homes. Whatever builders build, they are able to find buyers reasonably quick. But the homebuilding industry has been hampered by a labor shortage and the difficulty of obtaining construction loans.
  • Numerically, in June, new home sales fell 8 percent. The decline is inconsistent with existing home sales, which had risen 3 percent. Since the existing home sales market comprises over 90 percent of all home sales, the overall housing market recovery is still intact.
  • The decline in new home sales do not reflect a lack of buyers since it takes only 3 months to find a buyer on average now versus 10 to 14 months a few years ago. The decline instead reflects too little new home construction. If homebuilders build 10 homes, then there will be 10 new home sales; if building only 3 homes then there will be 3 new home sales. Housing starts of single-family homes have mysteriously tumbled in the past two months.
  • Newly constructed home price is notably higher than that of existing homes. Higher construction costs have opened the gap between the two property types. That means there is more room for existing home price to rise to catch up.
  • Big homebuilders are publicly listed and can tap finances through Wall Street. But small homebuilders need construction loans from local banks; the difficulty of obtaining these loans have forced the small builders to be on the sidelines. Knowing this, big homebuilders are quickly buying up empty lots and lands to stake out their claim for the future.
  • After the U.S. Civil War, many former union soldiers of Irish heritage roamed across the continent to stake out their claim to land – mostly in empty western Canada. The British Queen Victoria panicked. So she immediately sent token Brits to occupy lands in western Canada. To make absolutely clear that the land belonged to the crown and not to Americans, the very outer western island was given the name Victoria Islands and the province was named as British Columbia. The lesson shows someone will claim that empty desk, empty office, expiring listing, or what not, so make a clever case that it is yours first.

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