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Explaining the gap between new home sales and inventories

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  • James A. Kahn

Abstract

For much of the last four decades, the stock of unsold new homes has tracked sales very closely. Since 1995, however, inventories have fallen far behind rapidly advancing sales. What accounts for the change? Market trends have both reduced the need for inventories and slowed the response of inventories to shifts in demand. At the same time, the long current expansion has strained the resources of the building industry, creating supply shortages and raising costs.

Suggested Citation

  • James A. Kahn, 2000. "Explaining the gap between new home sales and inventories," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(May).
    • Handle: RePEc:fip:fednci:y:2000:i:may:n:v.6no.6
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    References listed on IDEAS

    as
    1. James A. Kahn & Mark Bils, 2000. "What Inventory Behavior Tells Us about Business Cycles," American Economic Review, American Economic Association, vol. 90(3), pages 458-481, June.
    2. Topel, Robert H & Rosen, Sherwin, 1988. "Housing Investment in the United States," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 718-740, August.
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    Cited by:

    1. James A. Kahn, 2008. "Durable goods inventories and the Great Moderation," Staff Reports 325, Federal Reserve Bank of New York.
    2. Steven J. Davis & James A. Kahn, 2008. "Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 155-180, Fall.
    3. Edward P. Lazear, 2010. "Why Do Inventories Rise When Demand Falls in Housing and Other Markets?," NBER Working Papers 15878, National Bureau of Economic Research, Inc.
    4. Steven J. Davis & James A. Kahn, 2007. "Macroeconomic implications of changes in micro volatility," Proceedings, Federal Reserve Bank of San Francisco, issue nov.

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