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Feb. 25, 2021, 7:58 a.m. EST

26.4%: How builders are coping with low inventories

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Rex Nutting

The Big Number: A record 26.4% of new homes on the market don’t even exist yet.

What Happened: Home builders who are struggling to keep up with the demand from home buyers are increasingly selling homes that haven’t been built yet. According to the Census Bureau, 307,000 homes were on the market at the end of January, but just 42,000 of them had been completed—at 13.7% of listings, that’s the lowest percentage on record. Nearly twice as many listings—81,000, or 26.4%—were being offered before ground had been broken.

What It Means: Builders such as D.R. Horton /zigman2/quotes/202032328/composite DHI -0.65% , Lennar /zigman2/quotes/202536373/composite LEN -1.07% and PulteGroup /zigman2/quotes/201694804/composite PHM -0.09% are selling homes like Boeing /zigman2/quotes/208579720/composite BA +1.50% sells airplanes—with a long lead time. As long as demand holds up, builders can count on rising prices and steady work for months ahead. But if demand softens because new homes are becoming unaffordable, watch out below.

Related story: New home sales rise as buyers remain hamstrung by the lack of property listings

/zigman2/quotes/202032328/composite
US : U.S.: NYSE
$ 93.14
-0.61 -0.65%
Volume: 2.60M
April 13, 2021 4:00p
P/E Ratio
12.58
Dividend Yield
0.86%
Market Cap
$34.10 billion
Rev. per Employee
$2.09M
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/zigman2/quotes/202536373/composite
US : U.S.: NYSE
$ 103.74
-1.12 -1.07%
Volume: 2.08M
April 13, 2021 4:00p
P/E Ratio
10.60
Dividend Yield
0.96%
Market Cap
$32.12 billion
Rev. per Employee
$2.37M
loading...
/zigman2/quotes/201694804/composite
US : U.S.: NYSE
$ 54.05
-0.05 -0.09%
Volume: 2.54M
April 13, 2021 4:03p
P/E Ratio
10.43
Dividend Yield
1.04%
Market Cap
$14.31 billion
Rev. per Employee
$2.10M
loading...
/zigman2/quotes/208579720/composite
US : U.S.: NYSE
$ 253.27
+3.75 +1.50%
Volume: 15.90M
April 13, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$145.63 billion
Rev. per Employee
$412,489
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