Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: ild who wrote (30742)	5/25/2005 12:00:06 PM
From: CalculatedRisk	Read Replies (2) of 116555

Top of New Home Sales and beginning of the end of RE bubble. I expect New Home Sales to decline over the next several months (gradually) and be below 1 million (SA) later this year. I admit ... trying to call the top, at a possible top, is somewhat of a fool's game<G>. As you posted, mortgage applications are still strong. Interest rates are still low. But ... The RE bubble is getting major national press. Greenspan and NAR Chief Economist Lereah are both acknowledging regional bubbles. And I think the new guidelines for HELOCs and high LTV loans will have some impact. Your point about the builders and new construction is very possible - even probable. Maybe new RE construction will continue strong for longer than I think ... if sales fall and building continues, we will see a significant rise in supply. Right now supply is 4.1 months (SA). In '90, it jumped from 7 to 9.4 months. In '79/'80 it went from 6.9 to 11.6 months. We might see a similar jump in supply.

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