Selling New One Family Homes in America

Updated September 19, 2013

While there have been modest improvements in the U.S. housing market, one key metric is still looking pretty sad, particularly when looking back over the past 50 years.

Here is a graph from FRED showing the number of new one family homes sold in the United States:

You can readily see the dropping sales as the Great Recession (in grey) took hold.  Since then, sales have risen from a low of 280,000 on an annualized basis in May 2010 to the current level of 394,000, a respectable increase of 40.7 percent over less than three years.  Time to celebrate!

But hang on a minute.  Let's look at the whole picture from FRED showing the number of new one family homes sold on a monthly basis going all the way back to the early 1960s:

The number of new one family homes sold peaked at a whopping 1,389 million units on an annualized basis in July 2005, then dropping to the aforementioned 280,000 in May 2010, a drop of 79.8 percent!  Housing sales had been above the 1 million units for quite an extended period of time, basically remaining there between August of 2002 and November 2006.

With the current level of one family housing reaching its new post-Great Recession high of 458,000 units in January 2013, keep in mind that all data has to be put into its long-term context.  After all, the current level is still 71.7 percent off its peak and is at levels below where it stood for nearly all of the sixties, seventies, eighties, nineties and into the new millennium when the population of the United States was far lower than it is today. 

That can hardly be termed healthy, can it?

Addendum:

Thanks to Tim for his comment.  I do agree that the data from 2000 on shows a very unhealthy skew to the upside and probably one that we don't want to see repeated.  However, if we take the 605 monthly data points in the FRED record from the years from 1963 to the present, the average annualized monthly rate of single family new home sales is 662,300 over the nearly 50 year period.  Let's single out the 1970s, a period where the economy was far from robust and the burst of housing purchases related to growing baby boomer families was over.  During that decade, the average annualized monthly rate of single family home sales was still 659,000.  Keeping in mind that the population of the United States was only 189 million in 1963, 212 million in 1973, 234 million in 1983 and 260 million in 1993, it is still quite clear that home sales are very, very low historically speaking.