Shiller Says Housing Inventory Statistics Mislead

New York, NY, July 14, 2009--Yale professor Robert Shiller, one of the creators of the monthly S&P Case-Shiller housing price index, called the state of the housing market "abysmal."

Even though the slowing rate of decline in home prices is likely to continue, the housing market is "still in an abysmal situation," Shiller said in an interview with TechTicker.

Shiller said there is a "shadow inventory" of housing out there much greater than the 10-month inventory of unsold homes frequently reported.

A stable real-estate market has about a six-month supply of unsold housing. A 10-month supply is a stalled housing industry. "Shadow inventory," however is made up of houses that are yet to go into foreclosure but inevitably will as unemployment remains high and probably increases.

This is analogous to the actual unemployment rate. The official U.S. unemployment rate is 9.5 percent. But if you include all the people who should have full time jobs that don't, the actual number is 16.5 percent. And that's from the Labor Department.

Shiller also discussed the possibility of another ruinous housing bubble -- likely on the regional level.

Shiller said speculators bottom-feeding off of foreclosed houses could create "another bubble" in housing, once the excess inventory is worked off.