By examining quantities along with prices, we start to see a fuller picture of the housing collapse in the first decade of the 2000s. While the overall inventory of houses for sale increased from 2005 onward, places where house prices fell more did not see more houses flood the market, when compared to markets with smaller price changes. Instead, these markets experienced a massive and immediate collapse in the number of sales. In contrast, in the areas with the smallest price declines, the fall in sales was initially gradual, with a much larger collapse coinciding with the national economic recession, and subsequently a much slower recovery in sales. This evidence points partially to a story of collapsed demand, rather than increased supply, in the explaining the extreme illiquidity and drop of prices during the housing bust.
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