New home inventory projected to balance by late 2025 as supply declines

The months of supply has dropped to 78.2 months as of October 2024.

New home inventory is expected to balance by late 2025, as the months of housing supply dropped from its peak at 101.6 months, according to JLL.

In a report, JLL said if primary market transaction volumes normalize to 18,000 units annually, months of supply could decline further to 58.0 months by December, nearing levels seen in 2021.

Although current inventory levels remain high, with unsold units in completed projects and ongoing constructions, forward-looking supply indicators suggest improvement.

The volume of potential units from disposed sites where construction may start immediately dropped to 10,000 units in September 2024, the lowest since data collection began in 2012, down from 25,000 in March 2023.

JLL said this shift in the supply pipeline indicates moderation in medium-term inventory growth, potentially easing competitive pricing pressures on new projects over time.

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