There is one part missing from the narrative sketched out in home resales being subjected to monetary imbalance. It is a compelling explanation for what we find as the most striking aspect of existing home sales, namely the curious lack of depth among sellers. It’s as if despite rising prices there is a seller strike where a significant part of what should be that market just will not participate.

As I outlined a few days ago, the likely explanation is serious stratification. In other words, prices are rising much faster in the more expensive segments leaving those in either starter homes or still the lower tiers unable to make the usual jump that accompanies economic mobility. Because they aren’t buying up, they aren’t selling despite rising prices which are supposed to signal at least stable demand.

That’s the part that demands further examination. There is another subset of housing that is supposed to act in that circumstance – new homes. If there was not enough supply via resales as the NAR suggests, thwarting a more consistent and healthy home market, then home builders should have been the answer. As noted Monday, this is not an imbalance that just showed up, it has been a factor for at least several years (and in all likelihood throughout the QE-inspired mini-bubble that favored “investors” over potential resident owners). Where are the home builders?

If there is demand for even starter homes well above the visible and attainable supply, that is exactly the market imbalance that should favor new construction. Instead, outside of what increasingly looks to be a one-off rise in new home sales in 2014, home sales have been rather stagnant. All the way back for June 2013, the Commerce Department has been estimating new home sales at around 500k almost as if that were an anchor or fixation. There have been revisions here and there redrawing the exact trajectory, but for the most part ever since then new home sales have been stuck around that level – especially since the start of 2015 (as if that were coincidence).