Consider this a brief follow-up to last week’s examination of existing home sales figures…

Good news! (Again.) New home sales are soaring, exceeding expectations, and signaling that despite people not having jobs, money, or much credit, everyone’s buying a home. Yes, that may have had something to do with the problem in the first place, but let’s not worry about this. New home sales were up almost 10% in July!!

But I’m not going to need to run a statistical analysis of whether this rate really indicates growth or not. Because not only are the year-over-year sales prices down 11.5%, negating the month-over-month 9.6% rise in total sales, but the year-over-year total sales figures are down 13.4%.

Surely I don’t need to draw a graph showing why a 13.4% reduction in sales combines poorly with an 11.5% reduction in price. This is a sign that the housing market is recovering!

Of course, it’s actually just another sign of the bubble being created by the temporary tax break for new homes. One anomalous month that is only good in comparison to surrounding months and still represents total regression on an annual basis does not a recovery make. In fact, it should make you dread the fall numbers that will drop so sharply that it will likely crush this inflated optimism harder than it would had the numbers never started to look artificially good.

The only actual positive indicator in this whole report is that the supply of new homes is starting to dry up, to its lowest level in a decade and a half. I’m no fan of American capitalism, but I’ve been saying for months that if your really wanted to save it, you’d put in a five-year home-building moratorium nationwide. If you combined this with a bunch of WPA-type programs, then the construction industry wouldn’t fold completely and it would keep the supply of houses in check long enough for the existing homes to start to recover some of their value. But as long as people are building new homes, an already over-glutted market will continue to deteriorate further and this will never lead to the recovery of the market.

Unless, I guess, you just open the borders completely, which I’d also support. Then there might be enough demand for American houses to counteract the extreme bubbilicious glut we’re facing now.

I can’t wait to see what good news comes out next!