Typically the news reports for the housing slump report comparisons between this year and last. But, as Paul Krugman points out, the drop was already underway a year ago. The more meaningful comparison is with two years ago.
According to Census Bureau, via Krugman, new home sales are off 21% from August of 2006 to August of 2007.
But they are off 38% from August of 2005 to August of 2007.
NewMexiKen has always wondered about this annual comparison business. Car sales are reported the same way. I’ve always thought that the way to properly report these kinds of statistics would be to say sales are up or down against the preceding five-year average.