Serial Inventory Growth (Home Edition)

I live to read David Rosenberg's daily missives, so you can imagine my disappointment on Thursday when he said he was not going to be posting one on Friday morning. Well, he made up for it in spades on Monday.

I just wanted to highlight one section though he sent a 16 pager and it is about a topic that I have been fascinated by, housing inventory.



David presents this as his ultimate rebuff of the NAR's exciting existing home sales report on Monday. Along with this musing "which dragged the months’ supply to 7.8 from 9.3 in July and August and the 11.3 months’ peak in April 2008. This may seem like a great level, but keep in
mind that during more normal market conditions, the average months’ supply is between 4.5 and 5.0 months. However, this could be the calm before the storm as first-time homebuyers rush into the housing market to take advantage of the $8,000 tax credit that is about to expire that the end of November. According to the National Association of Realtors, this is indeed what is happening – “first- time home buyers accounted for more than 45% of home sales during the past year…”

David points out that Census bureau keeps track of year round vacant housing units, which is currently at 3.5 million homes. Additionally, 300,000 homes are being foreclosed on each month. So instead of looking at the drop of month's supply of housing from 9.3 to 7.8, what we really have is 15 months, and growing, supply of homes. Ouch!

Looks like I will be a serial renter for awhile longer.