Housing's Doing It's Own Thang

Even as the overall economy appears to have fallen over a cliff since last month, is it possible that the housing market is getting close to finding its bottom?

The first chart below shows the annual percentage change in existing and new home sales through September and the second chart shows the same for monthly supply:


Except for the change in new home sales, which represent a relatively smaller part of the overall housing economy, the indicators are in the same area they were at the beginning of the housing downturn.

The big question is whether home prices are close to stabilizing. We'll find that out tomorrow when the Case-Shiller index for August comes. Case-Shiler has shown that price declines have slowed in recent months.

Mike Englund of Action Economics thinks that continued inventory declines:

may be clearing the way for the new home sales figures to start to form a bottom into year-end, alongside what now appears to be an outright up-trend for existing home sales from the bottom formed over the past twelve months....housing may continue to follow a cycle of its own through this downturn, just as it did through the last recession and ensuing expansion