In today’s Wall Street Journal I find this gem:

Maybe home builders should knock off work until spring.

Pillory OPEC for not raising oil production and pillory home builders for producing too much?! And another:

“If people stop cutting prices, that’s actually good [for builders],” says David Goldberg, an analyst with UBS Investment Bank. “If everybody does it, it works. If one builder does it, it doesn’t.”

If OPEC conspires to raise oil prices, it’s evil, but it’s OK to conspire to keep housing prices up? This is bad reporting.

It’s in each builder’s interest to keep building as long as their cost to build is lower than the expected sale price and the cost of capital for keeping the house on the market for longer than historical averages (and at higher interest rates than before the credit crisis). They will continue to build and prices will continue to fall. It probably won’t be a sellers’ market in housing in many parts of the country until 2009 or 2010. While builders continue to build, the 10-month supply of houses will only slowly drop and prices will also only drop slowly. If it made sense to build houses at 50% of current prices in some markets, there will be building for a while especially with labor and materials less scarce given that the peak of the housing boom is over.

Lower housing prices will make houses more affordable and stoke demand. That is what media should anticipate: a smoothly functioning market because the market price isn’t too high to sell anything. Not a way to repeal the Law of Supply and Demand.