A model home at the new community Viridian at Esencia in Rancho Mission Viejo, CA, on Tuesday, Sep 18, 2018. (Photo by Jeff Gritchen, Orange County Register/SCNG)

New homes are under construction on the west side of Mason Ave., across from Porter Ranch Community School in the Porter Ranch neighborhood of Los Angeles, CA, on Thursday, Oct 11, 2018. (Photo by Jeff Gritchen, Orange County Register/SCNG)

Sound The gallery will resume in seconds

City Ventures, along with Long Beach city officials, hosted a ceremony for the Grand Opening of ÒHuxtonÓ on Elm Avenue in Long Beach on Tuesday, September. 18, 2018. A dozen of the new solar-home complex units are open and sold while more are under construction. (Photo by Brittany MurrayPress-Telegram/SCNG)

Construction workers work on new homes by Seville at Park Place community in Ontario on Monday, May 7, 2018. (Photo by Watchara Phomicinda, Inland Valley Daily Bulletin/SCNG)

Construction continues at the Park Place community being built in southern Ontario Wednesday June 21, 2107. The demand for single-family homes in the Inland Empire has fueled the strongest building activity in nearly a decade, according to a new report from the UC Riverside School of Business Center for Economic Forecasting and Development. Single-family home construction in the region hit its highest level (for a quarter) in 9 years, at 2,182 units, in the first quarter. This represents the greatest number of units built since the first quarter of 2008 when 2,242 units were constructed, according to the report. (Will Lester-SCNG/Inland Valley Daily Bulletin)



Promotion signs for the recently completed single-family homes at the Judson Ranch Project in Redlands, Ca., Wednesday, June 21, 2017. The demand for single-family homes in the Inland Empire has fueled the strongest building activity in nearly a decade, according to a new report from the UC Riverside School of Business Center for Economic Forecasting and Development. Single-family home construction in the region hit its highest level (for a quarter) in 9 years, at 2,182 units, in the first quarter. This represents the greatest number of units built since the first quarter of 2008 when 2,242 units were constructed, according to the report. (Photo by John Valenzuela/Inland Valley Daily Bulletin/SCNG)

Construction for new homes continue at the Park Place development in Ontario in February. (Stan Lim, The Press-Enterprise/SCNG)

A worker in a ditch at the new community Viridian at Esencia in Rancho Mission Viejo, CA, on Tuesday, Sep 18, 2018. (Photo by Jeff Gritchen, Orange County Register/SCNG)

Inland Empire construction activity is up on the residential side, with building permits for new units increasing 3.9 percent this year. Almost four in five of those permits are for single-family homes. Seen here are new single-family homes for the North Ranch Redlands community in Redlands. (Photo by John Valenzuela/Inland Valley Daily Bulletin/SCNG)

When 2018 started, the housing buzz was “where’s the supply?”

Now with the year almost complete, the industry now wonders “where did all the buyers go?”

Ponder that in housing-starved Southern California, builders have the largest standing supply of completed homes to sell in six years. Yes, newly constructed residences are a pricey niche that’s not for everyone. Still, the change of momentum is remarkable.

Housing tracker MetroStudy reports that at the end of the third quarter, 3,401 new homes were finished but unsold in the four-county region covered by the Southern California News Group. That’s up 428 homes in 12 months, or 14 percent, and was the highest inventory level since 2012’s second quarter.

Homebuilders have been gradually ramping up their production of new homes in the region following a significant slowdown during and immediately after the Great Recession. But this year, house hunters have pulled back — for both new and existing residences.

If you need a stark measurement of the buyer reluctance, look at this: CoreLogic reported Southern California home sales of all types in September suffered their largest year-over-year decline in nearly eight years.

Growing challenges

So why the pullback? Pricier mortgages cut house hunters buying power. Housing prices have yet to react with noteworthy discounting. Job security seems good, but after eight years of economic progress, nagging doubts about the extended durability of the upturn persists.

And don’t underestimate the psychological impact of an ugly election cycle, complete with widely publicized claims of a looming housing calamity if a rent-control proposition passed. It failed.

It adds up to a situation where not too long ago local builders had many buyers waiting months for homes to be completed. Today, most housing projects offer new homes ready for immediate occupancy — with special pricing, no less.

Look at the market upheaval in Orange County. It’s got the region’s biggest boost in new-home supply, according to MetroStudy. As of Sept. 30, O.C. had 1,074 finished residences for sale, up 277 or 35 percent in a year. It’s O.C.’s largest new-home inventory in nearly 12 years.

The Inland Empire’s new-home inventory grew by 11 percent in a year to 1,426. In Los Angeles County, the builders’ count of unsold homes rose just 1 percent to 901.

Builders, faced with their own industry competition, also are up against homeowners in the region who rushed to list their homes.

The days of bidding wars for limited homes on the market are waning. As that new-home supply swelled in the third quarter, Southern California owners averaged 35,333 listings, according to ReportsOnHousing. That’s 4,568 more existing homes on the market than a year earlier — or 10 times the growth of unsold new homes.

Cloudy climate

And the picture’s has only gotten murkier since September.

Southern California listings of existing homes for sale have swelled by 8 percent — 3,069 more residences for sale — in the first eight weeks of the fourth quarter, ReportsOnHousing data shows.

Yet this is an autumn period when many owners typically take homes off the market. Note that in the previous six years, existing-home supply dropped by an average 1,560 homes in the same early fall timeframe.

So homeowners must be patient, at a minimum. Take an Orange County seller: It might take twice as long to sell a home than it did in 2017. As of Nov. 15, ReportsOnHousing’s “market time” estimates sales taking 122 days, listing to escrow, up 61 days in a year.

Los Angeles County? 44 more days to sell in a year to 105 days. Riverside County? 42 more days to 134 days. San Bernardino County? 45 more days to 117 days.

And that’s if the home sells at all. Because ReportsOnHousing found the pace of new escrows being opened for existing homes — a good hint at how closed sales will eventually do — running 16 percent slower than a year ago in mid-November.

This stunning turn of fortune is well-captured by an index measuring builder optimism in Western states from the National Association of Home Builders.

The year started with high confidence, an 83 index reading for January in this zero-to-100 yardstick where anything above 50 is considered upbeat. That was the third-highest score since 2005.

By November, though, the index had fallen to 65 reading — the lowest in three-plus years.

Who knew that 2018 would be the year when house hunters had too many homes to choose from?