There are well over 4.5 million used homes for sale (on the MLS), plus all those new homes and FSBOs. Can you imagine being one of 'em?

Someone try to figure out how many homes are really unwanted and for sale in the US today.

'Cause it's not just the record 4.58 million the NAR reports, it's the investor-owned units being rented out "until the market settles", it's the foreclosures and pre-foreclosures, it's the new homes, it's the spec homes, it's the cancelled contracts returned to market, it's the homes and condos still being built, it's the FSBO and Craigslist homes, and it's all the homes buyers have pulled off the MLS for now waiting to go back on.

It's millions. Millions and millions and millions. And like kudzu or tribbles, they just keep coming.

So, my question: Can you imagine trying to sell a home in this environment? And especially at 2005 or 2006 prices?

Get a grip folks. If you want to move your unwanted home, you're gonna have to slash the price. Just ask the folks at Hovnanian.

Classic mania. Classic crash. And now there's all this inventory that nobody wants and nobody wants to admit to themselves what its true value is.

Damn, this is gonna end ugly.

Vacancy rate soars, millions of houses and apartments sit empty, inventory of unsold homes builds, and homebuilders keep adding fuel to the fire

Supply. Demand. Inventory. Prices.

Any questions? It's just Econ 101 folks, playing out to perfection.

From the Businomics blog:

Add together homeowner vacant and rental vacant and we've got a 1.5 million housing units vacant ABOVE NORMAL VACANCY RATES.

OK, what's normal annual demand for new housing? Counting population growth, vacation homes, demolitions and changes in family size, I peg demand at about 1.7 million units. I know that others have estimated demand at 1.6 or 1.8 million units, so let's be generous and use a high number like 1.8 million. Current housing starts are 1.5 million, plus another 0.1 of manufactured housing, so we're underbuilding by 0.2 million units a year now. At that pace, we work off the excess inventory in only 7.5 years.

I don't claim a high degree of precision in these estimates, but they are certainly in the ballpark. And they say quite decisively that the housing problem won't be over next year, or probably even the year after.

Business planning implications: Stay away from the housing construction supply chain. Look for price declines in markets that are relatively overbuilt and undergrowing.

Bizarre-o-world: Homebuilder stocks jump because they're (supposedly) adding more dead inventory into a crashing market

We're officially in la-la land now.

The untrustworthy and error-prone Commerce Department new home permit numbers yesterday prompted the media to deceptively headline that homebuilding rebounded - up 0.8%! Party time!

This is strange in and of itself because the number was actually down 23% year over year, which is the only number that really matters. It was up 0.8% vs. the month prior, but nobody looks at month to month (nobody smart that is). Plus the numbers themselves were bizarre (and obviously so error filled they're worthless). A 44% surge in the midwest and down in all other regions. Yeah, right. Detroit and Cleveland we need more houses!

So homebuilder stocks rallied off their lows, as Wall Street bets are coming in the the housing crash is over, because they think homebuilders are building new homes at a faster pace (which they aren't), which is great news - more inventory! (which is actually terrible news)

Confused? Because Wall Street sure is. They should be FREAKING OUT that homebuilders are building ANY homes, given that inventory is skyrocketing and sales are falling. This would be like celebrating that Global Crossing was laying more fibre-optic lines during the telecom crash. More inventory! Great news!

Even the government warns people not to rely on these numbers - with AN 11% MARGIN OR ERROR ON EITHER SIDE! Permits flat? Maybe - they could have been down 11% or up 11%, f*ck, we just don't f*cking know! Don't trust us!

Folks, there's an 8.1 month supply (at least) of dead inventory out there, only fools are buying houses, you can't get a mortgage anymore, and the number of completed but unsold homes is up 43% vs. last year, at 179,000 unwanted units (thanks housingdoom!)

Bottom line - homebuilders are on the way to Chapter 11. Adding ANY more inventory into this disaster is a horrific business model. And this will all end so, so, so badly.