Unexpectedly Intriguing!
May 29, 2014

According to preliminary data released by the U.S. Census Bureau, for the second time in the past three months, the trailing twelve month average of new home sale prices declined.

In April 2014, the initially reported figure for the median new home sales price was $275,800, down from the revised figure of $281,700 in the previous month. More significantly, the trailing twelve month average of median new home sale prices, which allows us to minimize the effects of seasonality in the housing data, fell from $268,583 in March 2014 to $268,292 in April 2014.

Trend in Trailing Twelve Month Average of Median U.S. New Home Sale Prices, July 2012 through April 2014

The last time the trailing twelve month average of median new home sale prices declined was in June 2012, right before the second U.S. housing bubble began to inflate.

So what might that mean for the U.S. economy?

Historically, for the 605 months through April 2014 for which we have trailing twelve month data (or rather, from December 1963 through April 2014), there are 103 months in which the trailing year data for median new home sale prices fell from the preceding month. 42 of those months coincided with periods of outright economic contraction in the U.S.

The average economic growth rate for the 103 months of declining median new home sale prices is 1.0%. The average economic growth rate of the remaining 402 months is 3.5%.

According to the National Association of Home Builders, new housing construction (residential investment) typically makes up about 5% of GDP. Over the last four quarters, it has accounted for an average of 3.1% of the nation's GDP.

We think that housing prices are a coincident-to-slightly-lagging indicator of the relative health of the U.S. economy - it's something that tends to be in sync with the overall state of economic conditions in the U.S. As such, housing prices are confirming something we already know - the U.S. has been experiencing recessionary conditions in early 2014.

Labels:

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.