Housing Cool Down has Begun

We reported the views and fears of economist Paul Krugman on Feb 14th (see entry for details). He was concerned that the housing bubble on both coasts would burst, not slowly deflate.

Today, two weeks later, the Wall Street Journal reports that the number of unsold (new) homes on the market has risen “..to nearly a ten-year high.”

528,000 homes are on the market, a 5.2 month supply. New home sales were off 10% in northeast, midwest and south. They were, however, up 11.3% in the west. Later today we will get figures on existing home sales from the National Association of Realtors.

One economist, from Daiwa Securities, sees these numbers as a signal that the market will defalte slowly, not crash. “The slowdown could be viewed as desirable , as speculative elements had entered the market last year and prospects for bubble like conditions had increased.

Let’s hope he was right.

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