The trend for the relative affordability of new homes sold in the U.S. flattened out since the end of 2019.
Measured as the ratio of the trailing twelve month averages of monthly median new home sale prices and median household income, the median sale price of new homes sold in the U.S. has ranged between a low of 4.88 times median household income from April through May 2020 and a high of 4.93 times median household income in January 2020 and in July 2020. The following chart shows the developing flat trend in the context of the available historical data for both data series since 1968. (Please click here to see a full-size version of the chart).
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The flattening trend can largely be attributed to the coronavirus recession, which has negatively impacted the incomes earned by the typical American household. At the same time, the recent trend for new home prices has itself held relatively flat in recent months. That combination of factors means the flattening trend in the affordability of new homes has developed primarily because incomes have fallen as a consequence of the recession.
U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 5 September 2020.
U.S. Census Bureau. Income, Poverty, and Health Insurance in the United States: 2018. Current Population Survey. Annual Social and Economic Supplement (ASEC). Table H-5. Race and Hispanic Origin of Householder -- Households by Median and Mean Income. [Excel Spreadsheet]. 10 September 2019.
U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 28 August 2020. Accessed: 28 August 2020.
U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 28 August 2020. Accessed: 28 August 2020.
Sentier Research. Household Income Trends: January 2000 through December 2019. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 6 February 2020. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]