Thursday, July 27, 2006

New Home Sales and Recessions

by Calculated Risk on 7/27/2006 06:36:00 PM

Updated by popular demand ...

Click on graph for larger image in new window.

The gray columns are economic recessions as defined by NBER.

For consumer led recessions (all but the most recent recession in 2001), New Home Sales were falling prior to the onset of the recession. It appears that New Home Sales peaked last year.

This doesn't imply a cause and effect relationship, but it is something to watch. If New Home Sales can stay above 1.1 million or so that probably increases the probabilities of a soft landing (just slower growth), as opposed to a hard landing (a recession).