Calculated Risk Wed 2009-12-30 11:11 EST
Housing Leads the Economy, Existing Home Sales are Irrelevant
...Residential investment is the best leading indicator for the economy. Residential investment will not recover rapidly because of the large overhang of existing vacant housing units. Existing home sales are largely irrelevant for the economy. ...The key to reducing the overall inventory is new household formation (encouraging renters to become owners accomplishes nothing in reducing the overall housing inventory). And the key to new household formation is jobs. And usually the best leading indicator for jobs is residential investment.
Calculated Risk; economy; Existing-Home Sales; housing Lead; irrelevant.