New Home Sales Boosting U.S. Economy

Jun. 28, 2022 6:27 AM ETITB, XHB, NAIL, HOMZ, PKB, IYR, REZ, REM, RWR, VNQ, ICF, FRI, PSR, JRE, KBWY, SCHH, ROOF, MORT, REET, FREL, SRET, EWRE, XLRE, USRT, NURE, PPTY, SRVR, INDS, BBRE, NETL, RDOG, IVRA, REIT, FPRO5 Comments1 Like

Summary

  • May 2022's new home sales in the United States were stronger than expected.
  • Political Calculations' initial estimate of the market cap for new homes sold in the U.S. during May 2022 is $32.73 billion, an increase of 3.1% from April 2022's revised estimate of $31.75 billion.
  • The National Association of Home Builders estimates new home sales contribute 3% to 5% of the nation's Gross Domestic Product.

Real estate Business Trends Graphs and charts

Vertigo3d/E+ via Getty Images

May 2022's new home sales in the United States were stronger than expected. Political Calculations' initial estimate of the market cap for new homes sold in the U.S. during May 2022 is $32.73 billion, an increase of 3.1% from April 2022's revised estimate of $31.75 billion.

The latest update of our chart shows the surging market capitalization of new homes in the U.S.

Trailing Twelve Month Average New Home Sales Market Capitalization in the United States, January 1976 - May 2022

While rising new home sale prices continued to boost the new home market cap, May 2022's data also benefited from an unexpected increase in the number of sales that came despite surging mortgage rates. Both these factors are illustrated in the next two charts.

New home sales rose in May 2022:

Trailing Twelve Month Average of the Annualized Number of New Homes Sold in the U.S., January 1976 - May 2022

Average sale prices reached $518,033:

Trailing Twelve Month Average of the Mean Sale Price of New Homes Sold in the U.S., January 1976 - May 2022

Because new home sales are counted toward GDP when their sales contracts are signed, a rising trend in the market cap for new homes boosts the U.S. economy. The National Association of Home Builders estimates new home sales contribute 3% to 5% of the nation's Gross Domestic Product.

That may not sound like much, but new home sales are providing a tailwind for an economy slowing under the growing weight of President Biden's inflation. How long that might continue in the economic climate the Biden administration has fostered is an open question.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Ironman is the alias of the blogger at Political Calculations, a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics. We should acknowledge that Ironman is either formerly or currently, and quite possibly, simultaneously employed as some kind of engineer, researcher, analyst, rocket scientist, editor and perhaps as a teacher of some kind or another. The scary thing is that's not even close to being a full list of Ironman's professions and we should potentially acknowledge that Ironman may or may not be one person. We'll leave it to our readers to sort out which Ironman might behind any of the posts that do appear here or comments that appear elsewhere on the web!
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