U.S. New Home Market Cap Spikes with Mortgage Rate Drop
The market capitalization of new homes sold in July 2024 reached a record high, breaking the previous nominal record from August 2005 during the height of the housing bubble.
After months of hovering near or above a seven percent threshold, interest rates on a 30-year fixed rate conventional mortgage dropped below it in July 2024. While the amount of the change was small, new home buyers appear to have leapt upon the lower rates, racing to buy new homes during the month.
Consequently, July 2024 was the best month for new home sales since March 2022, when the U.S. Federal Reserve first started hiking interest rates in the United States to combat the inflation unleashed by the Biden-Harris administration’s fiscal policies. The initial estimate of annualized new home sales is a seasonally-adjusted 739,000, which compares with a finalized sales count of 707,000 in March 2022.
That increase in sales was accompanied by a month-over-month increase in the average sale price of new homes sold in the U.S. The initial estimate of the average sale price of a new home sold in July 2024 is $514,800, which is up from a revised estimate of $501,700 for June 2024. For reference, the finalized estimate of the average sale price for a new home sold in March 2022 is $511,800.
The combination of the surge in new homes sold with average new home sale prices that remain well elevated has resulted in a spike in the U.S.’ new home market cap. For new home builders, that’s a welcome change because through June 2024, the industry had been experiencing stagnant growth.
The three following charts track the trends for the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through July 2024.
July 2024′s initial estimated trailing twelve month average new home market cap of $31.30 billion surpasses the $31.05 billion recorded in August 2005 in nominal (non-inflation adjusted) terms. Taking inflation into account, the size of the new home market in July 2024 is over 37% smaller in real terms than it was in August 2005.
Since mortgage rates have continued falling in August 2024, how that change will impact this month’s sales has yet to be determined, in part because July 2024′s elevated number of sales shrank the supply of new homes.
Lower mortgage rates provide that stimulus because they improve the affordability of new homes by reducing the monthly mortgage payments for equivalently priced homes. The downside of the mortgage math is that falling mortgage rates make it possible for home buyers to afford homes sold at higher prices, which will add an inflationary element to the new home market and U.S. economy.
References
U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 August 2024.
U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 August 2024.
Image credit: Aerial Neighborhood photo by David McBee on Pexels. Public domain image.
Source: https://politicalcalculations.blogspot.com/2024/08/us-new-home-market-cap-spikes-with.html
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world. Anyone can join. Anyone can contribute. Anyone can become informed about their world. "United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
LION'S MANE PRODUCT
Try Our Lion’s Mane WHOLE MIND Nootropic Blend 60 Capsules
Mushrooms are having a moment. One fabulous fungus in particular, lion’s mane, may help improve memory, depression and anxiety symptoms. They are also an excellent source of nutrients that show promise as a therapy for dementia, and other neurodegenerative diseases. If you’re living with anxiety or depression, you may be curious about all the therapy options out there — including the natural ones.Our Lion’s Mane WHOLE MIND Nootropic Blend has been formulated to utilize the potency of Lion’s mane but also include the benefits of four other Highly Beneficial Mushrooms. Synergistically, they work together to Build your health through improving cognitive function and immunity regardless of your age. Our Nootropic not only improves your Cognitive Function and Activates your Immune System, but it benefits growth of Essential Gut Flora, further enhancing your Vitality.
Our Formula includes: Lion’s Mane Mushrooms which Increase Brain Power through nerve growth, lessen anxiety, reduce depression, and improve concentration. Its an excellent adaptogen, promotes sleep and improves immunity. Shiitake Mushrooms which Fight cancer cells and infectious disease, boost the immune system, promotes brain function, and serves as a source of B vitamins. Maitake Mushrooms which regulate blood sugar levels of diabetics, reduce hypertension and boosts the immune system. Reishi Mushrooms which Fight inflammation, liver disease, fatigue, tumor growth and cancer. They Improve skin disorders and soothes digestive problems, stomach ulcers and leaky gut syndrome. Chaga Mushrooms which have anti-aging effects, boost immune function, improve stamina and athletic performance, even act as a natural aphrodisiac, fighting diabetes and improving liver function. Try Our Lion’s Mane WHOLE MIND Nootropic Blend 60 Capsules Today. Be 100% Satisfied or Receive a Full Money Back Guarantee. Order Yours Today by Following This Link.