by Calculated Risk on 12/23/2011 12:12:00 PM

Here is the first "distressing gap" graph after the benchmark revision for existing home sales. Even with the significant downward revisions to existing home sales for the years 2007 through 2011, most of the distressing gap remains.

The following graph shows existing home sales (left axis) and new home sales (right axis) through November. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales. The flood of distressed sales has kept existing home sales elevated, and depressed new home sales since builders can't compete with the low prices of all the foreclosed properties.

Click on graph for larger image.

I expect this gap to eventually close once the number of distressed sales starts to decline.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different.

On November Home Sales:
• New Home Sales increase in November to 315,000 SAAR
• New Home Sales graphs

Earlier in the week on Existing Home sales:
• Existing Home Sales in November: 4.42 million SAAR, 7.0 months of supply
• Existing Home Sales Revisions
• Existing Home Sales graphs