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Home Sales & Inventory: No Good News

August 26, 2008

By Dr. Bill Conerly, Businomics, Conerly Consulting LLC,

The headline sounds like good news–“Home Sales Up”–but there is no joy in Mudville.  The “increase” was really a blip (in technical jargon).  In reality, sales are still low.

The “increase” was really a blip (in technical jargon).  In reality, sales are still low.

The “inventory” was said to have risen, but remember that the number of existing (not new) homes for sale is not the inventory.  The true inventory is the stock of vacant housing units.  There are over six million housing units vacant but not on the market as for rent or for sale.  In truth, we have many, many more housing units “in inventory” than we need.  Solution?  Ultimately, we need more families to absorb the housing units.  What happens while we wait for population growth?  Price will continue to fall.

Sorry, we’re out of happy news this morning.

###

Bill Conerly is principal of Conerly Consulting LLC, chief economist of abcInvesting.com, and was previously Senior Vice President at First Interstate Bank. Bill Conerly writes up-to-date comments on the economy on his blog called “Businomics” and produces a monthly audio magazine available on CD. Conerly is author of “Businomics™: From the Headlines to Your Bottom Line: How to Profit in Any Economic Cycle”, which connects the dots between the economic news and business decisions.

  
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