The REAL story on housing inventories

You've got to be kidding me! Some "experts" are pointing to the decline in existing home, for-sale inventory in December as proof the supply problem has been solved. These guys don't know the real estate market.

I went back and pulled the November-to-December change in for-sale, existing home inventory, for several years. Here are the percentage changes:

2006: -7.93%
2005: -2.67%
2004: -12.41%
2003: -9.56%
2002: -9.52%
2001: -13.2%
2000: -1.01%
1999: -10.17%

Before 1999, you have to use single-family only stats, rather than the combined single family/condo/coop figures. But the pattern is the same:

1998: -13.2%
1997: -11.05%
1996: -13.5%
1995: -9.2%
1994: -8.61%
1993: -12.14%
1992: -11.56%

In other words, supply ALWAYS drops this time of year. Happy talk about declining inventories should be ignored, with extreme prejudice. IF ... IF ... inventory does not pick up in the February and March reports, then that'll be worth noting. But I expect it will