New homes in September sold at a seasonally adjusted, annualized pace of 389K. That's a miserable pace of sales compared to the last 20 years, when sales averaged 770K. But the important thing to note is that sales have risen by a very impressive 27% in just the past year. That is a huge change on the margin, and it is the reason that housing starts are up 35% in the past year. The residential construction industry is realizing that the six year slump in the housing market is over; excess inventories have been worked off and new demand is materializing. This is a housing recovery, and it's still in the early stages.