are we headed in the same direction

Below is a graph of the relationship of new home sales to existing sales as you can generally a pretty close relationship. A fairly large gap has developed during this period of economic upheaval. Hopefully existing sales do not fall to what would be the "normal" relationship with new home sales. Yet with the unemployment levels where they are and the direction of both existing sales and new home construction sales both headed in the same direction it does not paint a pretty picture. I would think in terms of new home construction the fall is logically over since at this rate we are way below the removal of housing units from existing stock. The primary questions now becomes how long do they stay at these levels. My belief is you can not see any significant gain in new home sales until the employment picture becomes a positive instead of negative with close to 15 million people unemployed and 7.7 million less people working than at peak employment, anemic growth will not spur a recovery in the near term.