We've been carefully monitoring the inventory levels of houses in the Treasure Valley. In both Ada County and Canyon County, the number of active listings on MLS have been falling since the peak 6 months ago. It's been a difficult six months to be a home builder, but the falling inventory levels give us a reason to be optimistic that the housing market is beginning to stabilize.
Resale listings in particular have diminished. Part of this is seasonality, but the greater driver is almost certainly that most current homeowners have a very low fixed rate on their mortgage and do not want to trade that for a new home with a much higher interest rate. As long as interest rates stay relatively high, resale listings seem likely to remain low.
Since resale listings are so scarce, new construction homes are selling at a disproportionately high rate. In recent history, new construction has comprised about 1/3 of the home sales in our market. But in December that number was 45% since there just wasn't much existing product on the market. We expect new construction to continue to represent a large share of home sales in the near term. At the same time, builders have cut way back on their production over the past six months because sales rates and prices have fallen. So the supply of listed new houses will surely continue to drop for a while. At some point soon, we think the level of available houses will get low enough that the housing market will see a shift. We are already below 3 months of housing supply, which is the lowest it's been since June 2022.
In recent months buyers have understandably been cautious and selective. Housing affordability, interest rates, and inflation have been enourmous obstacles for all home buyers. But our feeling is the time to get a great deal on a discounted house is coming to a close. At Riverwood Homes, for example, we have cleared the majority of our available houses, and we feel the bottom of the housing market is in our rearview mirror. Our message to prospective buyers is to buy now, if you haven't already, and refinance your mortgage later. The good deals and deep price drops are going away!
