Unexpectedly Intriguing!
August 30, 2017

Median U.S. new home sale prices continued to trudge slightly upward last month, continuing on their slow, upward trajectory after flattening somewhat last month.

The following chart shows the latest updates in the relationship between the trailing twelve month average of median new home sale prices against the trailing twelve month average of median household income from December 2000 through a preliminary projection for July 2017.

U.S. Median New Home Sale Prices vs Median Household Income, Annual: 1999 - 2015 | Monthly: Dec-2000 to Jul-2017

Let's next zoom out to take in the panorama view of the data, this time going all the way back to 1967. The dashed red box in the upper right hand corner corresponds to the data shown in the first chart.

U.S. Median New Home Sale Prices vs Median Household Income, Annual: 1967 - 2015 | Monthly: Dec-2000 to Jul-2017

Next, let's consider the relative level of affordability of the median new home for a typical American household, which we simply show in the following chart as the ratio of median new home sale prices to median household incomes.

Ratio of Trailing Twelve Month Averages for Median New Home Sale Prices and Median Household Income, Annual: 1967 to 2015 | Monthly: December 2000 to July 2017

Going by the latter measure, the median price of a new home sold in the U.S. reached its peak level of unaffordability in January 2017, when they reached their record peak value of 5.45 times the trailing twelve month average of U.S. median household income.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [PDF Document]. Accessed 30 August 2017.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 1 August 2017. Accessed: 1 August 2017.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 1 August 2017. Accessed: 1 August 2017.

Sentier Research. Household Income Trends: January 2000 through May 2017. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 22 June 2017. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]

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