US existing home sales (EHS) fell a disappointing 16.7% as the rush from the first time home buyers credit earlier in the fall depleted sales in December. However, sales had rebounded significantly from the lows last Jan-Mar and have reduced inventories significantly as well. It’s the inventory component that holds the key for prices as they move down from a catastrophic 11.2 months worth of homes down to 6.5 months of supply. Just put up a graph on EHS (as they decrease inventories) with S&P CS home prices and you will the relationship.

2009 was a terrible year for housing … …READ MORE