Keep homebuilders on the back-burner

Bill Conerly's Businomics Blog does an excellent job of tracking developments in the home building sector. Based on his arguments there's no reason to expect any improvement in the home building sector for years to come. In his most recent post he discusses why he thinks it could easily take 3 years for the excess inventory to be worked out of the system.

Bill's post from January presents a graph back through the 1970s that does an excellent job of showing the long run "normal" level of home inventory vs. the unprecendented levels we have to work through currently.

As an investment it was fun to watch the homebuilder stocks multiply many times, but my take on this is don't be in a hurry to jump in as the homebuilder stocks have fallen back to earth. It could be a long wait for a rebound.