Unexpectedly Intriguing!
November 29, 2018

It is increasingly looking like the market for new homes in the U.S. peaked in August 2018. That's bad news for homebuilders (Indices: ITB, PKB, XHB) and for the U.S. economy.

The following animated chart shows both the nominal and inflation-adjusted trailing twelve month average for the market capitalization of new homes sold in the United States from December 1975 through the preliminary data reported for October 2018. In it, we can see that the trailing year average market cap for U.S. new homes sales peaked in July 2018 at $20.32 billion in nominal terms, or $20.61 billion in terms of constant October 2018 U.S. dollars. The animation will show each chart for five seconds - if you're accessing this article on a site that republishes our RSS news feed and cannot see the animation, please follow the links to the individual nominal and inflation-adjusted charts.

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

That deceleration in the months since August 2018 has been significant. So much so that we've opted to also present the nominal and inflation-adjusted year-over-year growth rates of the U.S. new home sales market cap's trailing year average since January 2000, where we discover that we would have to go back to the March and April 2006 to find a similarly slow rate of market cap growth for new homes being sold in the U.S.

Year Over Year Growth Rate of Nominal and Inflation-Adjusted Trailing Twelve Month Average of New Homes Market Capitalization, December 1975 - October 2018

Once again, if you want to see the charts individually, please follow the links for the nominal growth rate chart or the inflation-adjusted version.

This kind of data may go a long way to explaining why the Fed's new chair has suddenly become rather dovish regarding the Fed's plans for setting the level of interest rates in the U.S., where sales in California's very high-priced markets appear to have been particularly hard hit by the Fed's recent series of rate hikes.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 28 November 2018.

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 228 November 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. [Text Document]. Accessed 14 November 2018.

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