Since World War II the United States has never seen such a down market for the sales of new homes as we’ve seen in the past two years. This fact can be attributed to several things and can/has raised more questions about when to expect the current recession to end.

Will the houses built during the boom ever be sold? Have home builders kept up with the market in lowering their prices?

For the past thirty plus years existing home sales and new home sales have tended to fluctuate up and down by the same minimal percentage (as pictured in the chart). In past recessions sales of new homes have certainly been less successful however their levels have never reached what we’re currently seeing for as long as we’re currently seeing it.

Floyd Norris of the New York Times said, “At the peak of the housing boom in 2005, sales of both existing and new homes were running at twice the 1976 rate. This year, the sales rate for existing homes seems to have stabilized at about one-third higher than the 1976 rate. New-home sales also seem to have stabilized, but at about half the 1976 rate.”

Even worse than new home prices according to the graphs are the prices of existing homes, at one point this year the median price for existing homes was 29% off from the peak. Norris add, “Median home price figures need to be used with caution, since there is no way to know how the median home sold in one month compares, in terms of size and location, to the median home sold in a different month. But in past recessions, new-home prices have tended to be weaker than existing-home prices, the opposite of what has happened in this cycle.”

Time will only tell what happens to new homes and the prices of existing homes,

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