One of the key feeder industries for manufacturers produced some grim figures recently.
Sales of new single-family homes in February were down more than 80% from the 2005 peak, sliding further from the 28% drop in existing home sales — and lower than at any point since the data was first collected in 1963.
With the drop comes a concurrent drop in demand for the materials and components that go into new homes – metal products, electrical fixtures, finished wood products and so on.
Analysts say a long-term shift in behavior seems to be underway. Homebuyers are hunting for bargains in smaller existing homes, especially those that are in foreclosure. Additionally, many larger new homes are being built in exurban communities, which require long and expensive commutes made worse by $4-a-gallon gasoline.
As proof of the problem, existing home sales in March rose 3.7% from February, according to data from the National Association of Realtors. But the median home price fell 5.9% in March – to $159,600 — from a year earlier.
On the upside, the Mortgage Bankers Association reported a jump in demand for home loans, putting loan demand at its highest since early December.