inventories

If you're trying to decide whether it's time to consider buying a house, the best clues can be found in the new and existing home inventory numbers. And despite all the other positive indicators, those figures are still much too high for comfort.

With an oversupply of oil on the market and OPEC afraid that higher prices will impair the U.S. recovery and sap demand, the fundamentals point to an oil price drop in the near term. Yes, markets move on emotion, and fears about unrest in Egypt have reversed that downward price trend, but the drop is probably coming.

One of these months, new-home sales are going to show that Americans have decisively returned to buying newly built residences. Unfortunately, November was not that month: New-home sales rose a less-than-expected 5.5% to a 290,000-unit annual rate.

Housing remains in a slow, but uncertain recovery, as existing-home sales increased a less-than-expected 5.6% last month, to a 4.68-million-unit annual rate. At least, home sales rose in every U.S. region, and inventories fell.

They increased a much-better-than-expected 1.9% in October, and September's tally was bumped up to a 2.1% increase, vs. 1.5% initially. Together, the data provide more evidence that suppliers and businesses expect a decent 2010 holiday sales season.

U.S. new home sales unexpectedly plunged 8.1% in October to a 283,000-unit annual rate -- very close to the all-time low of 275,000 hit this summer. What%u2019s more, inventories rose to an unhealthy 8.6-month supply and the median home price sank a record 13.9% to $194,900 -- all of which is indicative of a new home sale market that remains on life support, due to concerns about job security and the durability of the U.S. economic expansion.

Sales of existing homes were hit with their first monthly decline since July as October sales fell 2.2% to a seasonally adjusted 4.43 million-unit annual rate. However, the drop isn't too surprising, given the usual seasonal cooling of home sales in the fall.

As retailers wrapped up their earnings reports this week, most said they're back in cost-control mode and will tighten inventories after the holidays. Shoppers are still spending cautiously and costs are on the rise, so profits will have to be squeezed out of slowly rising sales.

U.S. wholesale inventories rose 1.5% in September, and when combined with a more-optimistic outlook by U.S. CEOs, the data suggest suppliers and businesses expect slightly better holiday sales this year than in 2009.

Pending home sales in the U.S. unexpectedly fell 1.8% in September, the National Association of Realtors reported Friday. It was the statistic's first decline in three months, and one that suggests that the housing sector's recovery is likely to remain uneven through at least early 2011.