Has the inflation phase of the second U.S. housing bubble begun to peak?
The latest data from the U.S. Census Bureau for median new home sale prices (Excel spreadsheet) is suggesting that may indeed be the case. Here, we observe a deceleration in the rate at which median new home sale prices have been escalating, which appears to have begun after May 2013:
The chart above spans the period of time covering the inflation phase of the second U.S. housing bubble, which began after July 2012 and continues through the present. In the chart, we observe that the trailing twelve month average of median new home sale prices, which we calculate to minimize the effect of seasonality in the U.S. real estate market, was growing at a linear rate in the months from July 2012 through May 2013. After that month however, the growth rate of median housing prices has begun to decelerate, which we observe in the increasing deviation of newer median home sale prices from their previous trend.
What could have caused such a change in trajectory after May 2013?
Keeping in mind that it takes three factors to ignite a housing bubble: fuel, oxidizer and a spark (these links will take you to our three part series on the origin of the first U.S. housing bubble), we find that what changed after May 2013 is the bubble's fuel supply - interest rates!
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