Number of existing homes for sale drops, freeing up market for new home builders

The number of existing homes listed for sale declined last month to the lowest level for September since 2005, according to statistics compiled by the National Association of Realtors and reported by Bloomberg. This means that builders of new homes are facing less competition.

The drop is “the most interesting thing you may not know about the housing market,” Josh Levin, a Citigroup Inc. analyst, wrote in a report yesterday. “Declining inventory is bullish for the homebuilder stocks.”

September was the eighth consecutive month in which there were fewer existing homes for sale than a year earlier. The total slipped 13 percent to 3.48 million, the lowest since January, which Levin described as a relatively slow month for listings and sales.

Foreclosure delays that leave homes stuck in shadow inventory may affect the data, he wrote. Yet he added that they reinforce his outlook for demand to catch up with supply next year, once a glut of homes stemming from last decade’s housing bubble is sold.

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