U.S. New Homes Market Cap Continues Plunging in October 2022

Political Calculations initial estimate of the market capitalization of the U.S. new home market fell to $26.74 billion in October 2022. This partially complete twelve month moving average is 11.2% below the new home building industry’s November 2020 peak. It’s also 3.6% below the revised estimate of $27.75 billion for September 2022, which was revised down from an initial estimate of $28.29 billion.

The latest update of the chart tracking the time-shifted trailing twelve month average of the U.S. new home market cap shows that development.

The following two charts show the latest changes in the trends for new home sales and prices:

For these time-shifted moving twelve month averages, these changes are being clocked now as older, higher sales and price data from previous months are dropping out of the moving average calculation. There are indications however from October 2022′s raw data that the downward trend may be slowing. Here’s how Reuters reported an “unexpected” reversal:

Sales of new U.S. single-family homes unexpectedly jumped in October, shrugging off rising mortgage rates and house prices, which have drastically eroded affordability.

New home sales rebounded 7.5% to a seasonally adjusted annual rate of 632,000 units last month, the Commerce Department said on Wednesday. September’s sales pace was revised down to 588,000 units from the previously reported 603,000 units…..

The median new house price in October was $493,000, a 15.4% increase from a year ago.

These figures refer to the raw figures provided in the U.S. Census Bureau’s latest monthly report on new residential sales. That report also indicates the average new home sale price for October 2022 was $544,000, the highest average sale price recorded since July 2022′s just finalized all-time record peak of $564,900. That the new, unexpectedly high figure is below that value potentially confirms the peak in new home sale prices.

Falling sales and now falling prices. There’s a reason why the sentiment of new homebuilders has reached a decade low. After all, the last time the industry’s market cap was falling at a similar pace was during the deflation phase of the early 2000s housing bubble.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 November 2022. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 November 2022.