A Recession Measured by New Home Sales
June 27 2009 - There have been bad housing markets before, but never in post-World War II history has the market for new homes suffered as badly as it has in this decline.
That plunge raises questions about whether some homes built during the boom will ever be sold. It could also suggest that home builders have been slow to cut their prices enough to keep up with falling market prices.
For more than three decades, the sales volume of existing single-family homes and newly built houses tended to rise and fall by about the same percentage, as can be seen in the accompanying charts. To be sure, sales of new homes did tend to do a little worse during recessions, but the difference was small and short-lived.
The top chart shows sales volumes of both types of homes, compared with the sales pace for each in 1976. To avoid monthly gyrations caused by weather or other temporary factors, the figures use three-month moving averages of seasonally adjusted annual rates.
A Recession Measured by New-Home Sales
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