Unexpectedly Intriguing!
July 2, 2014

As a general rule of thumb, when you're working with relatively good quality data, it takes a minimum of six to ten data points before you can reasonably identify if a statistically significant trend exists within the data you might be following.

Looking at the most recent data for the developing trend of median new home sale prices with respect to median household incomes in the U.S., we're about one month shy of the minimum threshold we need to tell if a new linear trend has become established in the U.S. real estate market following the end of 2013.

U.S. Median New Home Sale Prices vs Median Household Income, 1999 (December 1999)-May 2014

Although technically, we could probably make that determination with the data we have today, where it initially appears that the data from January 2014 through May 2014 is close to parallel with the stable trend that existed from December 2010 through July 2012, prior to the inflation of the second U.S. housing bubble. If a new stable trend develops, it would be a very positive development for the U.S. housing market, as another major collapse in home prices would be unlikely.

Provided of course that Americans can earn the kind of income it takes to pay the monthly mortgage payment for the median new home being constructed in the U.S. these days. Like the housing bubble in London, it takes much much more than the average income earned by individual Americans to be able to really afford the typical new home being built in America today.

References

Sentier Research. Household Income Trends: May 2014. [PDF Document]. Accessed 2 July 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 2 July 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.