by Calculated Risk on 1/26/2007 06:08:00 PM

Please see the earlier post: December New Home Sales

2006 is the 4th best year for New Home Sales behind 2003.

New Home Sales
Year	Sales
2000	877,000
2001	909,000
2002	972,000
2003	1,088,000
2004	1,203,000
2005	1,283,000
2006	1,063,000

Click on graph for larger image.

One of the most reliable economic leading indicators is New Home Sales.

New Home sales were falling prior to every recession of the last 35 years, with the exception of the business investment led recession of 2001. This should raise concerns about a possible consumer led recession in the months ahead.

Some more optimistic observers will argue that sales have fallen back to a sustainable level after the excesses of 2004 and 2005. Others will argue that sales have to fall more in coming years, to make up for the excesses of recent years. That is one of the reasons 2007 will be such an interesting year.


The second graph shows monthly Not Seasonally Adjusted (NSA) New Home sales. This provides a different prospective of the housing bust.

This shows why the Spring selling season is so important in 2007. Will sales recover? Or will Spring 2007 look like 1982 or 1991 when Spring sales were disappointing.