Tuesday, December 19, 2006

"Rising Inventories and Price Cuts = Bottom of the Housing Recession?"

thanks to paul kasriel. rest of the story is also worth reading (headline). lots of good charts etc.

besten dank an paul kasriel. der rest ist ebenfall lesenswert (klick ├╝berschrift). ne menge gute chrts etc.

Sharply higher cancellations of new-home-purchase contracts undoubtedly are leading to the rising inventories of newly-completed homes for sale. This is prompting aggressive price incentives on the part of home builders to "move the merchandise." But with profits evaporating (see "(see Hovnanian's latest loss report) ",will builders plan to build a lot of new homes soon? The permits data suggest not. Again, separating the signal from the noise, Chart 4 shows that the year-over-year trend in building permits still is down. In November, the year-over-year change hit a new cycle low of minus 32.5%. In sum, I think builders are bending over backwards to rid themselves of expensive-to-carry inventory. But once this is accomplished, it will be a warm day in January before they begin to think about rebuilding their inventories of buildings.

the grey is showing past recessions / das grau markiert vergangene rezessionen

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