Although housing starts have also moved down over the past year, the decline thus far has lagged the downturn in sales, and the backlog of unsold new homes has climbed to a very high level relative to sales.
Given this sizable backlog and the likelihood that sales will remain weak or weaken further in coming months, cutbacks in housing construction are likely to continue to be a drag on economic activity in future quarters. Turning to consumer spending, real outlays decelerated considerably in the second quarter.