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July 29, 2006

Today's Housing Bubble Post

-- by Dave Johnson

Calculated Risk: New Home Sales and Recessions. Look at the chart, showing the correlation between drops in new home sales and recessions, and see where we are now.

or 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).

Then go look at this post and its charts to see the likelihood of people being able to sustain a good rate of new home sales.

I report, you decide.

Posted by Dave Johnson at July 29, 2006 12:06 PM

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