We got some good numbers today: The market jumped 2.5%. Wholesale prices rose in February for the second consecutive month, up 0.1% over January but down 1.3% from a year earlier. The shocker: Home construction jumped 22% on a seasonally adjusted basis; apartments accounted for 82% of the jump.
I am eager to see signs of recovery, but more home construction is not what we need. The backlog of homes for sale is about 13 months. In an exchange on http://www.greenfaucet.com, Michael Pento, chief economist for Delta Global Advisors, concurs with this assessment:
“Increasing the rate of new home construction now is absurd. They shouldn’t be building anything over 2 hundred thousand new units at this time. How are we ever going to eat through the inventory?”
And it can only depress prices further.