Most people would love a stable housing market. Sellers, because they would then be able to price their properties appropriately. Buyers, of course, because they want to feel comfortable they aren’t buying right before a market drop. The rest of the country, because they fear a housing collapse would bring down the rest of our fragile economy.
Some see signs of hope (not of price recovery, but of stability).
From the Times:
The inventory of houses for sale is at the highest level in history and some economists say a housing slowdown could bring on a recession …
But the stock market, which hated home builders for much of 2006, now thinks it sees signs of hope …
At first glance, such an opinion seems absurd … [and on second glance, as well???]
At the end of August, the latest figures available, there were 4.5 million homes and condos available for sale, more than double the number in late 2001 and up 35 percent from a year earlier. It was the highest figure ever.
[However,] the year-over-year growth in inventories peaked in May, with a 38 percent rise.
The stock market is supposed to forecast the future, turning lower before the bad news and higher before the news grows good. In that regard, it got the decline right, with the Bloomberg United States home builder index, shown in the third chart, peaking in July 2005, when the housing sales statistics were running strong but the inventory numbers had started to edge up.
From the record close to the low this summer, almost exactly a year later, that index fell 46 percent, although even then it was up more than 250 percent from the end of 1999. Since then, it has risen 20 percent, while the Standard & Poorâ€™s 500-stock index is up only 10 percent.
Complete story: Seeing Something to Cheer in a Big but Stabilizing Inventory of Homes – By Floyd Norris, The New York Times