Home builder inventory just hit 2008 levels in the South (Florida, Texas, Tennessee)

Home builders just reported their highest level of for sale inventory in the South since the peak of the 2006-07 housing bubble, right before the brutal crash that occurred in 2008. On one hand – this surge in builder homes for sale is great news for buyers and investors, because it’s a signal that more inventory and cheaper prices will hit the market. On the other hand – it’s an ominous sign that the housing market in the South could be in a massive bubble, and one that is about it pop.

Each month, the US Census Bureau releases data on the number of homes for sale from builders. Most recently in May 2024, they reported that home builders in the South, which includes states like Florida, Georgia, Texas, and Tennessee, are currently offering 299,000 new build homes for sale (at varying levels of construction completion). This figure has spiked in recent months and is now at the highest level of all-time, even higher than the previous peak that occurred in August 2006 right before the last crash.

Clearly – the home builders are still quite active in the South. Active at a level that they have never been before in US History. Which suggests to me that we are about to side a boatload of new home supply hit the market. Currently, of the 299,000 homes for sale in the South, it’s estimated that about 60,000 of these homes are already completed and available for quick move-in. Meanwhile, 69,000 have yet to be started, while another 170,000 are currently under construction.

That 170,000 under construction is what you need to watch out for. At current completion times, builders are completing homes in about 5-6 months from ground-breaking. Suggesting that by the end of the year we could see a major pile-up of inventory in Southern states. On the map below, you can see the region covering the ‘South’ in America, which is defined by the US Census Bureau. It includes everything south of Washington DC, extending west towards Texas.

What’s interesting to me is that how concentrated the homebuilding activity is in these Southern states. Approximately 62% of all new homes for sale are in the South, with another 23% located on the West Coast. Meaning that only 15% of home-building activity is concentrated in the Northeast and Midwest. These deviations in home building by region help explain the bifurcated housing market we’re experiencing in America right now, and why inventory levels in the South/West are exploding, but remain subdued in the South.

This is a trend you can see very clearly on Reventure App, under the data point “Inventory Surplus/Deficit”. The states in red are the ones where the number of active listings is at or above the long-run average. They are universally located in the South and West. With the biggest supply gut of active listings occurring in markets like Arizona, Texas, and Florida (where the builders are most active).

The Inventory Surplus/Deficit data point is a great way for you as a homebuyer or investor to understand the supply situation in your market. It’s available under a premium plan, along with 40 other premium data points, at a cost of $39/month.

-Nick