Home Is Where the Bubble Is

Few issues have generated as much feedback as recent pieces reviewing the debates over the housing bubble and whether CPI overstates or understates inflation.

Clearly, housing and inflation are issues near and dear to most readers' hearts and minds, probably because they have a direct influence on their pocket books. A confluence of events, including today's relatively subdued trading session, has led me to revisit these issues and to attempt to see where they converge.

Last week, the government said housing starts rose 6.3% in January, the highest level since early 2000. On Monday, the National Association of Realtors reported existing home sales leapt 16.2% in January to an all-time high of 6.04 million units. Additionally, the median existing home price rose 10.2% on a year-over-year basis, the biggest jump since July 1987. ...