The National Association of Home Builders (NAHB) recently released an analysis of current housing market dynamics, particularly focusing on new home inventory. The May 2024 Census data reveals that the current inventory of newly built homes stands at a 9.3-month supply, while a balanced market inventory is considered to be five- to six-months, indicating the time it would take to sell the current inventory at the prevailing monthly sales rate. This figure has led some analysts to suggest that the single-family home market might be oversupplied, potentially foreshadowing declines in construction and home prices.

 
However, according to the NAHB, this interpretation oversimplifies the situation. "New home inventory is a measure of homes available for sale, rather than homes ready to occupy," clarifies the NAHB. In fact, only 21% of the new home inventory in May consisted of standing inventory or homes that had completed construction.
Moreover, the seemingly elevated level of new home inventory must be viewed in the context of the broader housing market, particularly the low supply of resale homes. The National Association of Realtors reports that the current months' supply of single-family resale homes is just 3.6, significantly below the balanced market threshold.
This shortage of resale homes is a critical factor contributing to ongoing price increases, despite higher interest rates over the past two years. The combined new and existing single-family home inventory is currently at a 4.4 months' supply, indicating that the overall housing market remains undersupplied.
https://www.nahb.org/blog/2024/07/high-new-home-sales-inventory