Unexpectedly Intriguing!
27 July 2021

A combination of upward price adjustments in the average prices of new homes sold in the U.S. in recent months with smaller than expected downward revisions in the number of sales has produced a surprising outcome for the market capitalization of new homes in the U.S. In June 2021, the trailing twelve month average for the U.S. new homes market cap has risen for the first time since it peaked in December 2020.

Trailing Twelve Month Average New Home Sales Market Capitalization, Not Adjusted for Inflation and Adjusted for Inflation, January 1976 - June 2021

The initial estimate for the market capitalization of new homes sold in the U.S. rose to $30.2 billion in June 2021, up from a trough of $29.6 billion in the preceding month. The market cap for new homes sold in the U.S. last peaked at $31.15 billion in December 2021.

The surprising rebound comes after June 2021's sales volume for new homes recorded their lowest seasonally adjusted annualized rate since April 2020, which marked the bottom of the coronavirus pandemic recession. Thr result is based on initial data for June 2021's sales figures that will be revised at least two more times before being finalized in the next several months.

Looking at regional data, the biggest drop in the initial number of seasonally-adjusted annualized reported sales occurred in the U.S. Census Bureau's northeast region, which fell by 27% from May 2020. The number of sales also fell in the South, but by a much smaller percentage. Revisions for these regions will be something to pay attention to in upcoming months to see if the initial estimate of June 2020's market cap is a blip or the end of a microrecession for the industry.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 27 July 2021. 

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 13 July 2021. 

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