Sales Up, Inventory Shrinking, Time to Stay Careful

From The news from many markets is that sales are up measurably in most markets while inventory available in these same markets is shrinking. While that doesn’t jibe with NAR’s recent report of more months of inventory, from all points of the compass in the U.S we are hearing the same refrain.This is one reason why we believe that the sales increase of the last four to six months will not likely last.  Still up from last year, yes.  Up as much as they have been, not as likely. For that reason and the fact that there are some overhangs in the economy (employment still stagnant, consumers still strapped and borrowing to fund spending among them) we do not think that high single digit increases in units are sustainable for the remainder of the year.

Why the caution?  To encourage our readers to continue to watch their market carefully and watch their spending more carefully.  We strongly believe that the market will end the year up and that next year will be up as well.  The recovery is underway.  But watch that your expectations of the strength of the recovery don’t exceed the cash flows that increased sales will deliver.