As I feared, the media seem to have completely missed the record vacancy rate on ownership units reported by the Census Bureau yesterday. The 4th quarter data showed the vacancy rate at 2.7 percent, 50 percent higher than its level of two years ago. It had never crossed 2.0 percent before 2005. The decision to ignore the quarterly vacancy data is bizarre. The monthly reports on new and existing home sales always get at least a small story (usually including a comment from David Lereah, the chief economist of the National Realtors Association), even though the changes are often driven by weather and random error. Typically, vacancy rates don't show much change quarter to quarter, but they have in the last few years. The rental vacancy rate is also very high by historic standards, although it is down somewhat from the record levels of 2004. (There are more than twice as many ownership units as rental units.) Anyhow, the record number of vacant owenrship units will be placing downward pressure on home sales prices in the months ahead. This is news.
--Dean Baker
