Now that we have Sentier Research's report on median household income for the U.S. in April 2014, we're now able to update our charts showing the evolution of the second U.S. housing bubble as it has progressed through its inflation phase. Our first chart looks at the relationship between the trailing twelve month average of median new home sale prices and median household income since December 2000, which allows us to directly compare the second U.S. housing bubble with the first:

With the trailing twelve month average of median new home sale prices falling for the second time in three months, the data suggests that we are seeing the second U.S. housing bubble continue to go through a peaking process.

We should note that we don't necessarily expect the same kind of deflation process that followed the peaking of the first U.S. housing bubble. The April 2014 data indicated that while median new home sale prices fell, the quantity of new homes sold rose. That combination is somewhat healthier than the outright collapse in both sales and prices that defined the deflation phase of the first U.S. housing bubble.

To put the state of the bubble market into the historical context of what a non-bubble driven housing market looks like, our next chart expands the time frame of the first chart back to 1967, which corresponds to the oldest data directly published by the U.S. Census Bureau's on the median income earned by all U.S. households.

Our final chart goes back four years further in time, to December 1963, to capture the oldest data we have showing the trailing twelve month average of median new home sale prices since that time:

References

Sentier Research. Household Income Trends: April 2014. [PDF Document]. Accessed 30 May 2014. [Note: We have converted all the older inflation-adjusted values presented in this source to be in terms of their original, nominal values (a.k.a. "current U.S. dollars") for use in our charts, which means that we have a true apples-to-apples basis for pairing this data with the median new home sale price data reported by the U.S. Census Bureau.]

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 30 May 2014.

Previously on Political Calculations

We were among the first to declare that a second housing bubble was forming in the U.S. economy, and we were the first to back it up with an objective framework of analysis and data. Our ongoing analysis is chronicled below....

• The U.S. Housing Bubble Is Back - we apply our groundbreaking analytical methods to determine that a new housing bubble has begun to inflate in the U.S. economy.
• Fuel, Oxidizer and a Spark - Part 1 - we revisit the origins of the first U.S. housing bubble and identify the factors that ignited it.
• Fuel, Oxidizer and a Spark - Part 2 - we explain why housing prices rose so much more in just four states than they did elsewhere, and point our finger at the Fed's below-market interest rate policy as the primary source of fuel for the bubble.
• Fuel, Oxidizer and a Spark - Part 3 - we examine the factors that kept the first U.S. housing bubble going, even after the Fed finally acted to stop throwing so much fuel on the fire.
• Confirming the Second U.S. Housing Bubble - using revised data, we confirm that there is no apparent new-year slowdown in the inflation phase of the new U.S. housing bubble.
• As the Housing Bubble Inflates: Month 9 - we use hard data to refute the housing bubble deniers!
• As the Housing Bubble Inflates: Month 10 - we note the fourth consecutive record for median new home sale prices and discuss the spark that set off the second U.S. housing bubble.
• Setting the Baseline for a Better Housing Affordability Index - how affordable is your home when compared with every other American homeowner? We create a new index to answer that question for any household income level.
• As the Second U.S. Housing Bubble Inflates: Rapidly Escalating Prices - each revision of median new home sale prices indicates the second U.S. housing bubble is growing even faster than the first!
• The Sales Mix of the New Housing Bubble - we find that just like in the first U.S. housing bubble, the sales mix of new homes in the second U.S. housing bubble is being distorted in a very similar way.
• The First Anniversary of the Second U.S. Housing Bubble - we mark the first birthday of the second U.S. housing bubble.
• Is the Second U.S. Housing Bubble Beginning to Peak? - We note a deceleration in the upward trajectory of median new home sale prices and identify the primary cause. Along the way, we find that bubbles can only exist if the Fed wants them to exist!
• U.S. New Home Sale Prices Stalling Out - we confirm that there's more to the deceleration of growth in new home sale prices than just a single bad month.
• Breathing New Life Into the Second U.S. Housing Bubble - After stalling out through September 2013, we find that U.S. housing prices began to rise again with lower mortgage rates following the Fed's decision to delay tapering its purchases of U.S. Treasuries and Mortgage-Backed Securities in September 2013.
• Slowing Inflation for the Second U.S. Housing Bubble - looking at the data through December 2013, we find that while the second housing bubble has resumed inflating, it would also seem to be inflating at a decelerating rate.
• U.S. New Home Sale Prices at the Mercy of Mortgage Rates - We find that housing prices are responding to the level of mortgage rates in the U.S. - rising faster when they fall and slowing when they rise.
• Revisualizing the Second U.S. Housing Bubble - We respond to a request to redraw our median new home sales price vs median household income chart after adjusting the data to account for inflation.
• Real Estate Prices Begin to Contract - We catch up with a delayed report indicating that new home sale prices began to contract in February 2014.
• U.S. Real Estate's State of Malaise - Following our analysis that median new home sale prices in the U.S. have begun to contract, we dug deeper into the data to find out specifically where.
• What's Driving the U.S. Housing Market? - we look at the evolution of the sales mix of new homes over time to explain why a shift toward high end homes is really an indication that a bubble is distorting the market.
• New Home Sale Prices Fall for Second Time in 2014 - We document the second time that the trailing twelve month average of new home sale prices fell in 2014 and calculate some basic statistics from the data of what kind of economic growth rate typically goes along with that situation.
• The Bigger Picture for U.S. Real Estate - A data visualization exercise where we start in close and zoom out to show how median new home sale prices are changing over time!