By: James Wood
Retail sales in Utah grew by 43 percent from 2003 to 2007, an increase of over $7 billion in just four years. But this remarkable growth was not unique. There have been similar retail booms in Utah’s past and, as in the recent boom, they were closely related to a rapid run-up in housing prices.
A look at historical data shows a very high correlation between retail sales and housing prices. Increases in retail sales tend to mirror increases in housing prices (see Figure 1). There have been three periods since 1976 when annual housing price increases exceeded 10 percent; 1976-1979, 1993-1995, and 2005-2007. In each period retail sales also expanded dramatically with annual increases in sales of at least 10 percent.
Figure 1: Percent Increase in Housing Prices and Retail Sales