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Home sales on the cusp of a rebound

New home sales have dropped by a fifth since March, a similar-sized slump to those seen during the previous two housing downturns. With policy now turning more supportive, high-frequency data suggest that sales are bottoming out and a cyclical rebound looks increasingly likely. This should quash fears of a housing market crash. But financing constraints will continue to limit new construction and property investment is unlikely to bottom out until late next year.

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