It is hard to say an increase in new home sales is a good sign since prices are still declining. Think of any retailer who is marking down merchandise in order for it to move off the shelves. Counting the turnover is not a measure health. The only positive would be that inventories are dropping, so that the supply of homes has declined slightly.
The Case-Shiller home price index is down 14.1% yoy which is the worst decline on record. Foreclosures are increasing and prices are being marked down as banks want this collateral out of their portfolio.
Affordability is increasing but consumption is really driven by wealth and as prices go down, wealth is continued to be destroyed. The crisis portion of this credit cycle may be dissipating but that is not the same as suggesting a turn around. What it does mean is that inflation will become the most important issue for the economy.
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