My first thoughts were:
- Things started hopping saleswise after those quasi-governmental organizations (whomever they may be) picked up steam buying loans (in 1993);
- Inventory didn’t seem to be keeping up with demand in the earlier years, yet to my recollection housing prices weren’t soaring then; and
- Sales really started dropping off a year ago, but I do remember the National Association of Realtors still yaking back then.
So it’s part easy credit (obviously) but part lack of decent forecasting on the part of major builders as well (or, did a bunch of amatuers jump in late?). Who knows. But as I stared at the graph, I got the feeling inventory and pricing could (with emphasis) work itself out pretty quickly.
Then I looked at this again (compliments of NYT):
…and the warm fuzzies disappeared.