Political  Calculations

Now that the U.S. Census Bureau has finally posted the income data that it collected in January 2014 through the Current Population Survey (over a month late, the Bureau posted its data for February 2014 at the same time), we can now check in on the status of the second U.S. housing bubble. The chart below reveals what we find:

U.S. Median New Home Sale Prices vs Median Household Income, 1999-Present, December 2000 to January 2014

Here, we see that the second U.S. housing bubble continued to inflate through January 2014, although at a slower pace than it did during its initial phase, which ran from July 2012 through July 2013.

The pace of inflation would seem to affected by changes in U.S. mortgage rates, which spiked upward in mid-2013 as the Federal Reserve announced its decision to begin tapering its purchases of mortgage-backed securities and U.S. Treasuries, but which have since fluctuated between 4.3% and 4.5%.

That doesn't seem like a big range to drive the trend for median new home sale prices, but in the latter half of 2013 through January 2014, the rate of change of median new home sale prices would appear to be affected by those fluctuations, rising faster when mortgage rates drop to the low end of the range and rising at a slower pace when rates rise.

That, of course, is the result of median new home sale prices being very much at the economic margin, which is the reason why we pay such close attention to them.

We'll close with an updated look at the long-term trends in median new home sale prices in the U.S., which put the recent bubbles in U.S. new home sale prices into better context.

U.S. Median New Home Sale Prices vs Median Household Income, 1967-Present, through January 2014

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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