by Calculated Risk on 11/29/2006 03:08:00 PM

Please see the previous post: October New Home Sales

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.


The second graph shows YTD New Home sales through October. It now appears that 2006 will finish as the 4th best year behind 2003. Sales for the most recent months have fallen back to the 2002 level.



The third graph shows October New Home sales for the last 20 years. The recent sharp drop in sales is even worse than the decrease at the start of the 1990s housing bust.

October sales have fallen back to the 2002 levels.