Hous­ing

Daily Local News (West Chester, PA) - - MARKETPLACE -

may just be a data vo­latil­ity is­sue. With homes un­der con­struc­tion not ris­ing, it is doubt­ful that the sup­ply/ de­mand mis­match will be elim­i­nated any­time soon. Those look­ing to buy a new

MAR­KETS AND FED POL­ICY IM­PLI­CA­TIONS: >> The hous­ing mar­ket may not be boom­ing but it is clearly mov­ing for­ward at a steady pace. New home sales in the third quar­ter were up solidly from the sec­ond quar­ter. While to­tal hous­ing

starts were off slightly in the third quar­ter, sin­gle-fam­ily con­struc­tion was up a bit. That im­plies hous­ing may be a wash in the GDP re­port. Since res­i­den­tial in­vest­ment re­duced growth by 0.30 per­cent­age point, that is good news for growth. But the big prob­lem is still the lack of in­ven­tory.

Builders are cau­tious and tend to do very lit­tle spec­u­la­tive con­struc­tion. The num­ber of homes un­der con­struc­tion or com­pleted that are for sale is ris­ing but is way be­low what had typ­i­cally been the case over the pre­vi­ous forty years. Part of that may be fi­nance is­sues, but a lot is the un­will­ing­ness of de­vel­op­ers to

take a lot of risk. As a con­se­quence, buy­ers don’t have a lot to choose from. This re­port is not go­ing to af­fect the think­ing at the Fed or in the in­vestor world. It re­ally isn’t a change from the pat­tern. And with the elec­tion less than two weeks from now, it makes a lot of sense for ev­ery­one, be they mon­e­tary pol­i­cy­mak­ers or in­vestors, to sit back and watch.

Joel L. Naroff is pres­i­dent and chief econ­o­mist of Naroff Eco­nomic Ad­vi­sors. He can be reached at 215-497-9050 or joel@ narof­fe­co­nomics.com

On the Web: www. narof­fe­co­nomics.com

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