New home prices rebounded in August 2019 according to the latest report from the U.S. Census Bureau on new residential sales.
Both median and average new home sale prices were up, with the initial figure for the average new home sale price reaching an all-time high of $404,200, beating December 2017's previous high value of $402,900. That new record high for average new home sale prices isn't yet official, as data for August 2019 will be revised several times in upcoming months before being finalized.
The following chart shows the Census Bureau's monthly data for average and median new home prices from January 2000 through August 2019's initial estimate.
The trends for both median and average new home sale prices are continuing to stabilize following what had been downward trends since late 2017. The following chart focuses just on the trailing twelve month average for median new home sale prices and their relationship with median household income, where we find that new home sale prices have mostly moved sideways after bottoming in March 2019, with falling mortgage rates stimulating the new home market.
Even though new home sale prices have begun to rebound, the continued growth of median household income means that the typical new home sold in the U.S. has been becoming relatively more affordable for the typical American household.
That outcome is evident in the following chart, where we've shown the ratio of the trailing twelve month averages of median new home sale prices to median household income. As of the preliminary data for August 2019, the median sale price of a new home in the U.S. has dropped below 5 times the median household income for the first time since December 2013. The ratio had previously peaked at 5.45 times median household income in February 2018.
Elsewhere, Bill McBride believes 2019 may become the best year for new home sales in the U.S. since 2007. We'll update our analysis of the market cap for the new home sales market sometime in upcoming weeks to see if he's right!