I have a full plate in, you know, actual life today, so let me just drop this note here while we’re waiting for new home sales to be reported. I’ll update later when I have a chance.
The evidence is crystal clear that, as to new homes (which are by far more important than existing home sales in terms of the economy), sales lead prices, which in turn lead inventory.
Here are sales (red) vs. inventory (blue):
And here are prices (green) vs. inventory:
When it comes to existing homes, the NAR is very squirrelly about use of their data, but here is a long term look at sales vs. inventory:
Again, it’s crystal clear that sales led inventory through the housing boom, bubble, and bust. Note also that the secondary peak in sales in 2012 wasn’t reflected in a peak in inventory until one year later.
So, even while it is clear that the record low inventory of existing homes is driving sales prices through the roof, sales appear to have already peaked, and I expect prices to follow before inventory turns up.
More later as time permits.