New and existing home sales vs. inventory

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):