Although the data for recent months is still preliminary, it appears that the rapid inflation phase of the second bubble for new home prices in the U.S. ended in September 2015.

The second bubble for new home prices in the U.S. had gone through two primary phases. The initial inflationary phase of the second U.S. housing bubble saw the trailing year average of median new home sale prices escalate by $25.37 for every $1.00 that U.S. median household income rose in the period from July 2012 through July 2013. After a brief transition period, the second U.S. housing bubble entered into a second inflationary phase, where median new home sale prices rose by $11.17 for every $1.00 that U.S. median household income rose in the period from January 2014 through September 2015.

But since September 2015, it appears that the rate at which median new home prices are rising with respect to median household income is consistent with the rates that we've observed for the U.S. housing market outside periods of housing bubbles.

Since September 2015, the trailing year average of median U.S. new home sale prices has been rising at a rate of $3.26 for every $1.00 that median household income has increased. This current average rate of increase with respect to median household income compares to the following non-bubble growth rates for median new home sale prices that we've observed in the historic data:

• December 2010 to July 2012: An increase of $3.34 for every $1.00 that U.S. median household income increased.
• 1987-1999: An increase of $3.60 for every $1.00 that U.S. median household income increased.
• 1967-1986: An increase of $4.07 for every $1.00 that U.S. median household income increased.

The following chart shows all the available median new home sale price and median household income data we have going back to 1967.

In terms of affordability, a median new home costs over $103,500 more in 2016 than what the median new home built in the pre-U.S. housing bubble years from 1987 through 1999 would have cost if not for the inflationary impact of the U.S.' two inflationary housing bubbles in the years from 2000 through 2015, most of which would seem attributable to the U.S.' most restrictive local housing markets.

Data Sources

U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 27 June 2016.

Sentier Research. Household Income Trends: May 2016. [PDF Document]. 23 June 2016. [Note: We have converted all the older inflation-adjusted values presented in this source to be in terms of their original, nominal values (a.k.a. "current U.S. dollars") for use in our charts, which means that we have a true apples-to-apples basis for pairing this data with the median new home sale price data reported by the U.S. Census Bureau.]