Its March level of 59 is also historically strong and up from 55 in January. During the last housing slump the index was only in the high 20s. Just a few months ago, the trade group thought new-home sales would be down for 2001, but on Apr. 10, it revised its forecast to predict this will be a record year for new homes. On the other hand, it is not going to exhibit the same robustness it did in the latter part of the 1990s or early 2000. That's not to say the housing market is downturn-proof.
Economists say housing often follows the stock market with significant lag time.
And there's evidence that the red-hot housing markets in parts of the country heavily dependent on high tech have cooled. However, many metropolitan areas in California, including Orange County and Santa Anna, and the Western part of the country, notably Denver and Seattle, still have a shortage of homes for sale. The New York metropolitan area's housing market and much of the rest of the East Coast continues to be very strong, with shortages of available homes in Hartford, Boston, and Northern New Jersey, says Molony. This is probably in part because financial firms have avoided mass layoffs so far. The superheated markets are transitioning to more balanced markets, which is far more healthy.