Collapse of the Housing Bubble of 2009Sales volumes have collapsed from highs reached in 2009. While existing home sales remain above the lowest points of early 2009, new home sales have reached new lows. The recent data can been seen in the chart on the next page. This is not like the housing bubble that peaked in 2006, but it certainly looks like a micro bubble. The chart includes these negative features: Quadratic trend lines are cupped downward; new home sales have been below the three-month moving average since July; and existing home sales have been below the three-month moving average since December.
- These two months are the final two months for purchase contracts to be signed for purchase of homes with eligibility for extended federal tax credits.
- These are the months where recovery will occur from any effects of severe winter weather.
- This comes as the Fed ends purchase of MBS (mortgage backed securities) in support of the housing market.
- The expectation of higher future interest rates should move demand forward into these months from later in the year.