| New Home Sales Impacted More Than Existing |
| Written by Jonathan Smoke | |
| 05.04.2007 | |
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Discuss this article on the forums. (0 posts) One of the most interesting presentations at the April 26 NAHB Construction Forecast Conference was made by Jim Glassman, an economist and analyst with JP Morgan. In his presentation Life Without Housing? Ask Jimmy Stewart, Jim focused attention on the reasons for the rise in home prices and general growth in housing over the last several years, and the current downturn. His conclusions were that homes became more expensive because real estate “has many friends,” including: strong demographics, aging housing stock, post Katrina rebuilding and migration, post 9/11 focus on “cocooning,” subprime expansion, and tax legislation. All of these items contributed to greater demand, which in turn pushed prices higher. And as he put it, “…when things get expensive, they stop rising.” Jim’s looked at relative home prices and relative home sales for some very interesting views of what has happened. Not surprising was the view that home prices overall grew the most in the west and the west has subsequently seen the greatest drop in sales. But what was most interesting to me was he showed that new home sales have dropped far more significantly than existing homes, and the new home sales drop has occurred in all regions of the country. )) He further showed that sales of new single-family homes under $150,000 have dropped the most. )) This was a fascinating presentation, and I applaud Jim for this interesting analysis. But it leaves me wondering just why have new homes been impacted so much more so than existing homes and why has the pattern been consistent in all regions of the US? If you have a view, please share your opinions in our Comments section below. 
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