So yesterday, September 21, 2015, headlines writers proclaimed that U.S. existing home sales fall more than expected. Michelle Jamrisko at Bloomberg blamed "lean inventories" for the fall. Jamrisko went so far as to claim, "Limited availability of homes on the market is making it difficult for some Americans to take advantage of low interest rates and relocate after a recovery in property values."
Jamrisko quoted Stuart Hoffman, chief economist at PNC Financial Services Group of Pittsburgh who claimed, “Inventories are still holding back sales.” Seriously, did that guy listen to himself?
Jamrisko and Hoffman could not be more wrong. Inventory is not the problem for existing houses.
A glut of inventory exists! Existing house inventory has increased 86.1% since the low of July 31, 2006!
Sales come from buying power, not inventory. Prices get set by winning bids of puchases and sales in the face of what is on offer. As these are existing houses, more would sell if the offers would be high enough for them.
Of course, readers of the True Dollar Journal know better. I revealed the state of Existing House Sales way back on May 21, 2015, in EXISTING HOME SALES REVEALS OMINOUS BLACK CLOUD OVER THE U.S. ECONOMY. STILL THESE ARE THE BEST TIMES TO BUY RESIDENTIAL REALTY.
As I say always, numbers are meaningless without context. Even pictures that seem bleak such as downward curves can't tell anyone anything without context.
To understand what is going on, you need to see existing house sales and existing house inventory in context of the civilian population, specifically the civilian non-institutional population, ages 20 and older.
In spite of the worsening state of existing house sales, if you have the income, likely these are among the best days to buy a house in decades. However, far too many Americans cannot swing a mortgage to buy a house. That, my readers, is the biggest problem vexing the economy.
There are many could-be buyers, but few would-be buyers because so few have the means to swing a mortgage. And yet, True Dollar™ prices run near 50% off.