July new home sales data was a surprise, but a welcome one. For years, the market has been practically begging builders to both ramp up their efforts overall and to put more focus on serving the less expensive end of the market. Today’s data confirms both are happening in earnest. Sales were up by double digits in all areas, and the dip in price will be welcome relief to buyers struggling to find affordable inventory in this incredibly tight market. Inventory overall is also up meaningfully since last year, but it’s important not to get too excited by one report. Yes, new home sales activity is at its highest in years — but remains lower than at any point in the decade-plus between the early-mid 1990s and 2007. Given very high levels of demand that clearly aren’t fading and the fact that builders likely have a bit of a construction deficit to work off from the past few years of depressed activity, we’re going to need to see several more months of even higher sales activity — closer even to 1 million units — before we see meaningful dents in inventory limitations.