Good News: Home Inventories Are Falling
Total housing inventory fell 3.0% at the end of February to 4.03 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.2-month supply in January. Most housing experts look at inventory in assessing the overall health of the housing market, particularly in times of market stress.
According to Brian Wesbury and Bob Stein at First Trust Portfolios, "The best news in today’s report is that the inventory of existing homes is declining."
Comment: After rising for nine consecutive months in 2007, the important variable "months supply of houses at the current sales rate" has declined in three out of the last four months (see chart above), suggesting an improvement in the balance between homes available for sale and buyers in the market for homes.