3/29/2005

Increase of Home Sales

In the article "Sales of new U.S. homes soar in February" it is stated that home sales have risen 20% in some areas. How long can this continue? Probably not for long, it is reported in the article that the Federal Reserve is increasing interest rate to head off inflation. I think this is very good because we don't want inflation to take over but we needed a boost in our economy.
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1 comment:

Dr. Tufte said...

I am not one who is too concerned about home sales.

Those who are tend to relate home sales to some "fundamentals", which tend to suggest that homes are widely overpriced. People who are wedded to that idea insist that at some point the fundamentals they are looking at have to be correct.

I am not saying that those people are wrong. However, I have looked at those same fundamentals for a long time, and my opinion is that there has got to be something wrong with them if they are making bad predictions. Unfortunately, I don't have an alternative answer.

One thing I can tell you is that this has little to do with population growth. That is a small factor in home sales, and a steady one at that. So it is very much one of those fundamentals that isn't working as a predictor in my book.

5:10 PM

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