This was the headline on an article in yesterday’s Wall Street Journal*, which is sort of sad because you would think a business newspaper could get the economics right. It’s not “Existing-Home Sales Tick Up, but Prices Slip”. It’s “Existing-Home Sales Tick Up Because Prices Slip”!
All else being equal, when prices go down, sales go up. It’s a simple matter of movement on the supply and demand curve. The failure to understand this is going to make recovery in the housing market even slower and longer-coming.
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* S. Mitra Kalita and Dawn Wotapka, "Existing-Home Sales Tick Up, but Prices Slip," The Wall Street Journal, April 21, 2011.
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