But now home sales are falling and the number of unsold homes is at the highest level ever. If sales do not pick up this summer, when sales are usually seasonally strong, it could be a sign that prices are going to come under pressure and lead to a much larger decline in housing starts.

The accompanying charts show year-over-year changes in sales of existing single-family homes and apartments, using six-month moving averages to smooth out monthly fluctuations. The latest figures show sales of single-family homes down 4.4 percent, the largest dip since 1995, and apartment sales off 6.6 percent. Meanwhile, the number of existing single-family homes on the market is up 33 percent year-over-year, measured the same way. Figures from the National Association of Realtors, going back to 1983, show no comparable increase in homes for sale. The number of condominiums and cooperative apartments for sale is up 61 percent.

The sales outlook appears to be falling most rapidly in the Western states, where sales of existing single-family homes are running at 13 percent below levels a year ago. To be sure, over the 12 months through June more than 6 million single-family existing homes and 1.2 million new homes were sold.

By M. Sese
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