Amid many signs that the housing market is improving, there's one piece of data that's still causing concern among many economists: the Homeowner vacancy rate is 2.7 percent, higher than it has been in the four decades that the U.S. Census Bureau has measured it.
The vacancy rate is a measure of how many homes for sale in the country are empty.
Goldman Sachs economist Jan Hatzius concluded in a report last Monday that rising vacancies signal that the excess housing supply continues to grow – and that new construction has to decline further this year, even after a 13 percent decline in new home starts in 2006.
Meantime, J.P. Morgan economist Haseeb Ahmed said the overhang of vacant housing stock could erode existing home values as sellers cut prices to move their vacant properties.
Economists fear that many vacant homes are owned by speculators who are stuck with investment properties that they can't sell and who may be under increasing pressure to drop their prices.
"We are concerned that there could be downward pressure on prices for awhile," Ahmed says.
Source: The Wall Street Journal, Michael Corkery (02/05/2007)
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