According to preliminary data published by the U.S. Census Bureau, the trailing twelve month average of median sale prices for new homes fell in February 2014 after peaking a month earlier.
The preliminary new home sale price for February 2014 was $261,800, which was up from January's revised $260,800. However, the trailing twelve month average for median new home sale prices, which smooths out seasonal variations in the data, fell to $265,100 in February 2014 from January's 265,375 - the first contraction we've observed in the data for some time.
The Census Bureau's monthly data is typically revised upward for several months after it is first reported, as it takes time for larger sales occurring in a given month to be recorded.
Our chart below shows how the trailing year average of median new home sale prices have evolved with respect to median household income in the U.S. over the last 15 years. Note that the falling housing prices came as median household income saw its biggest increase since August 2012.
Unless upcoming revisions to the preliminary data change this result, February 2014 would mark the first time since June 2012 that the trailing year average of median new home sale prices declined from the previous month. July 2012 marks Month 0 of the period that coincides with the inflation of a new bubble in the United States according to the data we track.
The 19 month long period of month-over-month price increases in the twelve-month average from July 2012 through January 2014 would be the longest recorded since the 32 months of steady month-over-month increases recorded between January 2004 and September 2006, which coincides with the peaking of the first U.S. housing bubble.
As noted in other analysis, the ISM Non-manufacturing Report on Business for March 2014 indicates that the real estate, rental and leasing industry contracted in March 2014. If so, we may now be witnessing a peak in the second U.S. housing bubble.
Previously on Political Calculations
We were among the first to declare that a second housing bubble was forming in the U.S. economy, and we were the first to back it up with an objective framework of analysis and data. Our ongoing analysis is chronicled below....
- The U.S. Housing Bubble Is Back - we apply our groundbreaking analytical methods to determine that a new housing bubble has begun to inflate in the U.S. economy.
- Fuel, Oxidizer and a Spark - Part 1 - we revisit the origins of the first U.S. housing bubble and identify the factors that ignited it.
- Fuel, Oxidizer and a Spark - Part 2 - we explain why housing prices rose so much more in just four states than they did elsewhere, and point our finger at the Fed's below-market interest rate policy as the primary source of fuel for the bubble.
- Fuel, Oxidizer and a Spark - Part 3 - we examine the factors that kept the first U.S. housing bubble going, even after the Fed finally acted to stop throwing so much fuel on the fire.
- Confirming the Second U.S. Housing Bubble - using revised data, we confirm that there is no apparent new-year slowdown in the inflation phase of the new U.S. housing bubble.
- As the Housing Bubble Inflates: Month 9 - we use hard data to refute the housing bubble deniers!
- As the Housing Bubble Inflates: Month 10 - we note the fourth consecutive record for median new home sale prices and discuss the spark that set off the second U.S. housing bubble.
- Setting the Baseline for a Better Housing Affordability Index - how affordable is your home when compared with every other American homeowner? We create a new index to answer that question for any household income level.
- As the Second U.S. Housing Bubble Inflates: Rapidly Escalating Prices - each revision of median new home sale prices indicates the second U.S. housing bubble is growing even faster than the first!
- The Sales Mix of the New Housing Bubble - we find that just like in the first U.S. housing bubble, the sales mix of new homes in the second U.S. housing bubble is being distorted in a very similar way.
- The First Anniversary of the Second U.S. Housing Bubble - we mark the first birthday of the second U.S. housing bubble.
- Is the Second U.S. Housing Bubble Beginning to Peak? - We note a deceleration in the upward trajectory of median new home sale prices and identify the primary cause. Along the way, we find that bubbles can only exist if the Fed wants them to exist!
- U.S. New Home Sale Prices Stalling Out - We confirm that the rise of new home sale prices was beginning to sputter in the third quarter of 2013.
- Breathing New Life Into the Second U.S. Housing Bubble - After stalling out through September 2013, we find that U.S. housing prices began to rise again with lower mortgage rates following the Fed's decision to delay tapering its purchases of U.S. Treasuries and Mortgage-Backed Securities in September 2013.
- Slowing Inflation for the Second U.S. Housing Bubble - looking at the data through December 2013, we find that while the second housing bubble has resumed inflating, it would also seem to be inflating at a decelerating rate.
- U.S. New Home Sale Prices at the Mercy of Mortgage Rates - we observe that the growth of new home sale prices would appear to be decelerating as mortgage rates rise and accelerating when they fall.
- Revisualizing the Second U.S. Housing Bubble - we map out the inflation-adjusted trajectory of median new home sale prices with respect to median household incomes.
- Real Estate Prices Begin to Contract - the data is preliminary, but if it holds, we may be seeing the first month-over-month decline in median new home sale prices since the second U.S. housing bubble began to inflate in July 2012.
U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 24 March 2014. [Note: All this data is reported in terms of current (nominal) U.S. dollars.]
Sentier Research. Household Income Trends: February 2014. [PDF Document]. Accessed 11 April 2014. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]