A home is offered for sale in the West Town community in Chicago, Ill.
A home is offered for sale in the West Town community in Chicago, Ill. - 
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Kai Ryssdal: The Commerce Department reported on May sales for new homes this morning. It's a figure they've been keeping track of since 1963. I mention that date because in all the years since then, we've never seen a lower annualized new home sales number. That's mostly because people stopped shopping for homes after the government stopped offering an $8,000 tax credit to do so. Now, the housing market got us into this recession.

And as Marketplace's Jeremy Hobson reports from New York, we're going to need it to help get us out.

Jeremy Hobson: Plenty of market watchers here in New York were floored by this morning's news.

Dan Greenhaus is one of them. He's chief economic strategist at Miller Tabac. He says no less than our entire economic recovery is at stake.

Dan Greenhaus: Without that boost from housing, that boost from confidence and that boost from jobs, it's very difficult to make the case that we're going to have a broad-based, V-shaped recovery until the housing market fully turns and that may not be for several quarters.

Greenhaus says the reason the housing market matters has less to do with construction jobs and interest rates, and more to do with consumer sentiment.

Greenhaus: A house is someone's largest investment, and it's very hard to argue from a sentiment standpoint that I feel comfortable going to Best Buy to buy a new TV or J. Crew to get a new whatever J. Crew sells, if my single largest investment, that is my house, is going down in value every month.

So could a collapse in the housing recovery send us into a double-dip recession? I asked Mark Zandi, chief economist for Moody's Analytics.

Mark Zandi: If the housing market starts moving downward again, if we start seeing large consistent price declines, that would be the basis for a double-dip recession. In fact, I think the threat from housing is probably more serious than the threat that's coming from the European debt crisis.

But Zandi says this morning's news shouldn't be too surprising, given the expiration of that tax credit. He expects only modest declines in home prices going forward. And that, he says, should help us avoid a double-dip recession.

In New York, I'm Jeremy Hobson for Marketplace.

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