What builders see in a deeply unhealthy housing market What does this mean for homebuilders?

Didier Malagies • June 30, 2021


The big news from the U.S. Census Bureau’s May new home sales report is that sales inventory has increased to 5.1 months, which brings the three-month average to 4.63 months. That begins to change the equation for some homebuilders, who were absolutely thriving in an ultra-low-inventory housing market environment. 


As a reminder, when the three-month average for inventory is 4.3 months or lower, builders have the confidence to continue to build. When inventory is between 4.4 and 6.4 months, builders need to see sales growth to continue to build. When inventory is 6.5 months or above, builders will exercise caution and even halt new projects.


consensus: For Sale Inventory and Months’ Supply, The seasonally‐adjusted estimate of new houses for sale at the end of May was 330,000. This represents a supply of 5.1 months at the current sales rate.


The headline monthly supply of 5.1 months is what we saw during decent housing market demand in the previous cycle. So although inventory has increased, it is not at a level of concern. Mother Economics is a serial killer who wants to get caught. She leaves plenty of evidence for those who are interested in discovering her next moves. Tracking the data over many years will show you the way. 



The builder’s confidence index tends to correlate with inventory. Historically speaking, the current level of builder confidence is relatively high. The index shows a parabolic move in 2020 from the lows of the COVID-19 crisis, and has since moderated. Because this index tracks confidence, a somewhat subjective measure, it doesn’t make sense to look at the total levels and compare them to other cycles. The direction of the trend is more valuable than any number. For example, the index may approach 70, which is a respectable number, but when we consider that it peaked near 90, the drop tells what the builder is thinking.



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Older Americans maintain record share of housing wealth Redfin says housing wealth held by those 70 and older has reached $13 trillion

By Didier Malagies • March 18, 2026
That Redfin data point—$13 trillion in housing wealth held by Americans 70+—is a big deal, and it ties into several powerful trends reshaping the housing and mortgage markets. What’s driving this record wealth? 1. Long-term home price appreciation Older homeowners bought decades ago at much lower prices and have benefited from massive appreciation, especially post-2020. 2. Low mortgage leverage Many in this age group either: Own their homes outright, or Have very small remaining balances So their equity = real wealth , not just paper gains. 3. Aging in place Instead of downsizing, many are staying put longer, allowing equity to continue compounding. Why this matters (big picture) 1. Supply constraint in housing Fewer older homeowners are selling, which: Keeps inventory tight Supports higher home prices This is one reason younger buyers are struggling to find affordable homes. 2. Wealth inequality across generations Younger generations: Face higher home prices Have less access to equity Meanwhile, older Americans control a disproportionate share of housing wealth. Implications for mortgage and lending 1. Rise of equity-based lending This trend directly fuels growth in: Reverse mortgages (HECMs) HELOCs Cash-out refinances That $13T is largely untapped liquidity . 2. “Living off equity” becomes more common With concerns around: Social Security stability Inflation More retirees are using housing wealth as: Income supplementation Emergency reserves 3. Intergenerational wealth transfer We’re seeing more: Parents helping kids with down payments Early inheritance strategies using home equity The hidden risk This isn’t risk-free: If home prices flatten or fall → equity shrinks Property taxes + insurance (especially in places like Florida) can pressure fixed-income retirees Liquidity is still “locked” unless accessed strategically Bottom line That $13 trillion figure isn’t just a stat—it represents a shift in where wealth lives in America : Housing is now the primary balance sheet asset for older Americans It’s becoming a retirement tool , not just a place to live And it’s quietly shaping everything from housing supply to lending innovation  Didier Malagies nmls212566 DDA Mortgage nmls324329

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