After many months of bad housing news, things look a little better in terms of new homes sold:
That uptick over the last two months has helped to work off the excess supply of houses on the market:
What did it take to get the sales going up and thus to work off some of the inventory? Price cuts.
However, let’s keep the inventory in some long-term perspective:
We still have a huge inventory overhang. As noted in an earlier post, the rise in home prices has more than offset the benefit of low mortgage rates in the affordability calculation.
Business Strategy Implications: The risks in the housing market are still substantial, but they are slowing diminishing. Caution is still in order, but the odds of skating through 2007 without a downturn are looking a little better.