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Home Sales Data Problem: 'Shadow' Inventory

How big is the inventory of homes for sale? Fairly high, judging by April Existing Home Sales.

We don't really know how big the shadow inventory levels really are, i.e., we don't know how to predict how many people will decide to put their homes up for sale on any given month.

The headline Existing Home Sales figure was excellent: 5.77 million sales, well above the 5.65 million expected, and well above the 5.36 million in March.

But inventories of homes for sale rose by 418,000, so the supply of homes for sale increased to 4.04 million, an 8.4 months supply, up from 8.1 months. That’s a disappointment.

Other news was better: medium home price of $173,000 was up 4 percent year over year, the best print since last September.

Another piece of good news: mortgage rates remain below 5 percent in another indication that inflation expectations remain well-anchored.

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