Excess Inventory Will Delay Market Recovery.

Byline: Lew Sichelman

Washington-The nation's excess housing inventory totals nearly 3 million units, according to a new tally by the National Multi-Housing Council.

The group counts nearly 1 million empty units on the market over and above what was the normal amount during the 1990s and almost 2 million occupied units. And it says it's doubtful the extra stock will be worked off anytime soon.

"We're unlikely to be out of the wood until 2010 at the earliest," according to a research report prepared by the Multi-Housing Council's vice president of research and chief economist, Mark Obrinsky, the report concludes.

According to the latest Census Bureau count, 2.2 million vacant housing units were for sale as of this year's second quarter. Based on data from the American Housing Survey, the NMHC figures that the total breaks down to 1.8 million vacant single-family houses and 325,000 empty multifamily units.

But the study points out that not all the inventory can be considered excess. "Some vacant units are both normal and necessary for smoothly functioning markets," it says.

If the 1.6% vacancy rate for the 1990s could be considered "normal," the research note goes on, then the "right number" of for-sale units would be just over 1.2 million, meaning only 950,000 units - 825,000 houses and 125,000 apartments - can be ...