Unexpectedly Intriguing!
September 27, 2017

The just released new home sales data for August 2017 is preliminary, and the data for June and July 2017 is still subject to revision, but it looks like the market capitalization of the new home sales market in the United States may have topped out.

You can see what we mean in the following animated chart that shows the trailing twelve month averages of both the nominal market cap and the inflation-adjusted market cap for new home sales in the U.S. from December 1975 through August 2017.

Animation: Trailing Twelve Month Average of Market Capitalization of New Home Sales in the United States, Nominal and Adjusted for Inflation, December 1975 through August 2017

Market capitalization is the product of the annualized number of new homes sold each month and their average sales price. In the following chart, we've isolated the trailing twelve month average of the annualized number of new homes sold each month from December 1975 through August 2017.

Trailing Twelve Month Average of the Annualized Number of New Homes Sold in United States, December 1975 through August 2017

Using the trailing twelve month average of the annualized number of new home sales lets us compensate for the annual seasonality in the monthly data, which in this case, lets us see that the number of new home sales may have peaked in June 2017. We won't know for sure for several months if that month will prove to be a top in the new home sales market, as the preliminary data we have now is revised and the data for new months is reported.

Digging into the raw data for the annualized number of new home sales each month, we find that the number of new homes sales actually peaked in March 2017, where the monthly sales data has already been finalized, where declines in new home sales since have been registered in all census regions of the U.S.

This information confirms that the declines are not concentrated in the "South" census region, which might be expected in the aftermath of both Hurricane Harvey in Texas and Hurricane Irma in Florida, which both fall within the South census region. If anything, the "West" region has been the most negatively impacted in the period from March 2017 through August 2017.

What that suggests is that the topping of the market capitalization of new home sales in the U.S. is perhaps more directly attributable to a slightly delayed reaction by U.S. new home consumers to the series of interest rate hikes undertaken by the Federal Reserve since December 2016.

Data Sources

U.S. Census Bureau. Monthly New Residential Sales. Release Number: CB17-161. [PDF Document]. 26 September 2017. Accessed 26 September 2017.

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. [Online Application]. Accessed 26 September 2017.

Labels: ,

About Political Calculations

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

Stock Charts and News

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

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

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

Useful Election Data
Charities We Support
Recommended Reading
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.