Unexpectedly Intriguing!
July 26, 2018

Roughly every three months, we check in on the overall state of the new home market in the U.S. by estimating its market capitalization, where we take the average prices of new homes sold in the U.S. and multiply it by the number of new homes sold each month, then calculating its twelve month average to minimize the effects of seasonal variation in the monthly data. The following animated chart shows the results of that math, both in nominal terms and adjusted for inflation, for the period from December 1975 through the preliminary data just reported for June 2018. [If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to see the animation.]

Animation: Trailing Twelve Month Average New Home Sales Market Capitalization, Not Adjusted for Inflation [Current U.S. Dollars] and Adjusted for Inflation [Constant June 2018 U.S. Dollars], December 1975 - June 2018

In nominal terms, the trailing twelve month average of the market capitalization of the U.S. new home market has been rising since our last report three months ago, but at a decelerating pace, where the preliminary data for June 2018 suggests that the trailing twelve month average of the new home market capitalization has stalled in June 2018, with the months of both May and June 2018 recording a market cap of $20.1 billion in new home sales. This data will be revised several times during the next several months, so that may not the final outcome once all the data is finalized, but it is safe to say that the rate of growth of the new home market in the U.S. has slowed.

Scanning the news, CoreLogic has reported that new home sales in California have dropped sharply in June 2018, deviating from the pattern in the rest of the U.S. during the peak summer home-selling season. The California Association of Realtors has indicated that sale prices in the state reached an all-time high.

Going back to the national data, the U.S. Census Bureau reports that median new home sale price for June 2018 continued a downward trend for recent months. The following chart shows the trailing twelve month average of median new home sale prices versus median household income, where the recent upward trend appears to have peaked in April 2018.

U.S. Median New Home Sale Prices vs Median Household Income, Annual: 1999 - 2016 | Monthly: December 2000 - June 2018

Although based on preliminary data, the recent decline of median new home sale prices has come while median household income has been increasing, where new homes have begun to back off of the peak they reached in February 2018 to become slightly more affordable in recent months.

Ratio of Trailing Twelve Month Averages for Median New Home Sale Prices and Median Household Income, Annual: 1967 to 2016 | Monthly: December 2000 to June 2018

The ratio of the trailing year averages of median new home sale prices to median household income is however still elevated, with median new homes selling for just under 5.4 times the typical income of an American household in June 2018.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 25 July 2018.

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 25 July 2018.

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 25 July 2018.

Sentier Research. Household Income Trends: June 2018. [PDF Document]. Accessed 25 July 2018. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]


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.