Political  Calculations
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When we last looked at the U.S. housing market, we observed that median new home sale prices appeared to be stalling out. But what a difference a month makes, as both new data and the revision of data whose collection had been delayed as a consequence of the partial federal government shut down in early October 2013 makes it clear that new life is being breathed into the U.S. housing market.

Our chart below shows the relationship between median new home sale prices and median household income for each month since December 2000.

U.S. Median New Home Sale Prices vs Median Household Income, 1999-2013 (November 2013)

In this chart, we observe that the second U.S. housing bubble, which first began inflating after July 2012, has resumed inflating after stalling out in the months from July 2013 through September 2013.

U.S. 30 Year Mortgage Interest Rates, 2013-01-01 through 2013-12-26 - Source: FRED

The reason why median new home sale prices stalled out during that period has a lot to do with speculation on the U.S. Federal Reserve's potential tapering of its current quantitative easing programs during that time, thanks to their effect on U.S. mortgage rates. Here, through the Fed's combined purchases of $45 billion worth of U.S. Treasuries and $40 billion worth of Mortgage-Backed Securities each month, the Fed's quantitative easing programs have been working to stimulate the U.S. economy, and the U.S. real estate market in particular, by lowering U.S. mortgage rates below their natural market level.

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