The purpose of this graph is to show that these three indicators generally reach peaks and troughs together. Note that Residential Investment is quarterly and single-family starts and new home sales are monthly — Calculated Risk
From Calculated Risk Monday
It is important to remember that new home sales are more relevant for jobs and the economy than existing home sales. Since existing sales are existing stock, the only direct contribution to GDP is the broker’s commission.
“For the economy, what we should be focused on are single family starts and new home sales. As I noted in Investment and Recessions ‘New Home Sales appears to be an excellent leading indicator, and currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight.’”
Calculated Risk
“If new home sales and single family starts have peaked that would be a significant warning sign. Although housing is under pressure from policy (negative impact from tax, immigration and trade policies), housing has not peaked, and new home sales and single family starts will increase further over the next couple of years.”