Relative Unaffordability of New Homes Near All Time High

Following our analysis that indicates that the market for new homes in the U.S. is showing signs of topping out, we can also report that the median cost of a new home with respect to the median household income of a U.S. household is at or near an all time record.

The following chart shows the ratio of the trailing twelve month averages of median new home sale prices to our estimates of monthly median household income peaked in July 2017.

The trailing year average median price of new homes sold in the U.S. has risen to be 5.45 times the trailing year average of our estimate of median household income through July 2017. Preliminary data for August 2017 suggests the ratio has slightly declined with the median sale price of a new home having significantly declined from the previous month, but that figure will be subject to several revisions during the next several months, where we’ve found that later revisions for this data are most frequently revised upward before being finalized.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [PDF Document]. Accessed 27 September 2017.

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: 1 September 2017. Accessed: 1 September 2017.

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: 1 September 2017. Accessed: 1 September 2017.

Sentier Research. Household Income Trends: January 2000 through May 2017. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 22 June 2017. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars.]