National New Home Sales just released

New Home sales contracts signed for July dropped 12.4% to a seasonally annual adjusted rate of 276k close to the lowest annual rate on record which was May 2010. Average price was 196k vs 214k in July 2009 and now back to levels of 2004. Inventories of new homes moved up to 9.1 months supply. In the South housing starts are running at levels not seen since the late 70's and in some month's in early 80's. With household formation continuing to grow eventually supply will meet demand, just as builders overbuilt in the 2000's, they are now underbuilding, it will take time to catch demand, but it is a simple supply side economics issue.