New Home Sales vs. Labor Force and Civilian Population; Factors Behind Decreasing Sales

Reader Tim Wallace pinged me with a couple interesting charts on new home sales. The charts compare new home sales to the labor force and also to the civilian non-institutional population.

The numbers compare November 2015 to November in prior years. The numbers are not seasonally adjusted.

New home sales are at an annualized rate.

New Home Sales vs. Labor Force and Civilian Non-Institutional Population



For the above chart the labor force and population are in 1000's but new home sales are in 10's. Sales peaked in 2005.

New Home Sales as Percentage of Labor Force and Civilian Non-Institutional Population



For the above chart all numbers have the same scale so the percentages are accurate.

Labor Force Comparison

• As a percentage of labor force, new home sales peaked in 2005 at 0.856% and are currently at 0.315%.
• On a labor force adjusted basis, new homes are about 37% of what they were in 2005.

Population Comparison

• As a percentage of population, new home sales peaked in 2005 at 0.564% and are currently at 0.197%.
• On a population adjusted basis, new homes are about 35% of what they were in 2005.

These dramatically lower percentages are a function of numerous variables.

Factors Behind Decreasing Sales

1. An enormous amount of overbuilding in the bubble years
2. The aging of the population with millennials moving home, caring for their parents  
3. A change in the attitudes of millennials regarding debt and family formation
4. A change in the attitudes of everyone regarding the now discredited notions: home prices always go up, homes are your retirement, etc.
5. The affordability of new homes
6. Student debt

Mike "Mish" Shedlock