Housing: The Lost Half Decade
Wednesday, August 25, 2010 at 10:33AM While it has been a 'lost decade' for equities, housing isn't too far behind. The sector is now in the midst of a lost half decade and counting. Following up on yesterday's downright awful release of existing home sales, today's new home sales report for July came in at a seasonally adjusted annualized rate of just 276K, which is a record low dating back to 1963. Since peaking in July 2005, new home sales have now declined by more than 80% in five years. As seen in the chart, while the slope of the rally in housing was steep, the decline has been even steeper.
What makes the record low reading in new home sales even more notable is that we're at record lows even without adjusting for the growth in population. So even though the size of the US population has increased by 64% since 1963, new home sales are still at record lows. In the chart below, we have adjusted the new homes sales data by the size of the population. Here, the current levels are even more depressed. As of July 2010, new home sales totalled 0.09% of the US population. This is more than two-thirds below the historical average of 0.28%.
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Reader Comments (2)
Should that be 0.09%?
yes Thanks RSC. It has been changed.
What about a chart showing no. households over the total of existing and new home sales - I think such a chart would show that turnover in housing pre-GFC was unsustainable....