�Home builders are now in the business of selling shares, not houses.�

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Bob Meyer

Beyond The Limits Of Cash or Credit

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�Home builders are now in the business of selling shares, not houses.�

�Peter Schiff, President of Euro Pacific Capital, Darien (CT)

The Commerce Department reported that new-home construction rose 5.3% in November from the previous month, the largest monthly increase in housing starts since April and far above the level economists and analysts were expecting.

Meanwhile, the number of unsold new homes under construction is at an all-time high. Which led Peter Schiff to make the headline statement above. According to Schiff, home builders must keep building houses to maintain a market for their shares. It�s the only logical way to explain building new houses amid a growing glut of unsold inventory.

Economy.com, a unit of Moody�s Corp. which reports on housing affordability, reports that affordability dropped by more than 20% in nearly two-dozen markets. Mark Zandi, chief economist of Economy.com, noted, �You have to go back 25 years to find a decline that is as significant on a percentage basis.�