The slowing of activity has been most acutely felt in the real estate market, where the sales of new and existing homes contracted sharply beginning in the fall of 2005. Residential construction has slowed dramatically as well. As of November, single-family housing starts had fallen about 30 percent from their peak in January 2006.
Tentative signs have begun to emerge that the housing market may be stabilizing. Home sales appear to have flattened out since midyear, mortgage applications have been increasing, and consumers' perceptions of homebuying conditions, as reported in the Michigan survey, have improved.