How is the U.S. new home market faring?

That's a more difficult question to answer than usual because the U.S. Census Bureau isn't publishing data on new residential sales with the federal government shutdown still dragging on. That matters because when we assess the relative health of the U.S. new home market, the primary data we employ is the Census Bureau's new residential sales data that tells us both the estimated number of new homes sold each month and the average price at which they sold. We multiply these figures together to produce an estimate of the total value of new homes sold within the U.S. each month. We then calculate the trailing twelve month average to smooth out seasonal variation in the data, shifting it "backward" in time so it becomes more of a contemporary indicator of the trends being experienced by the new home market.

But if that government-compiled data is not available, does that mean we're dead in the water for producing that kind of analysis?

Don't be silly. As with most data the government publishes that's useful, there are alternatives available from private sector sources that provide a similar window for looking into the state of the new home market. We're going to use one of those alternative sources to do that today, which will give us a different but still useful picture of the industry.

We've tapped Zillow's monthly data for new construction homes, which covers single family residences and condominiums, which is based on sales data for this class of real estate from major metropolitan areas in the U.S. to produce a national figure. That's a subset of the data that's compiled in the Census Bureau's new residential sales data, but should work to give us an idea of how the market is for the new construction homes in the markets that Zillow covers.

And also for which it has sales data. Because Zillow obtains its data from state and local sources that are slower to report their monthly new home sales figures, it lags a bit behind the national and regional estimates of new home sales data reported by the Census Bureau. Zillow provided its first estimate for August 2025 just two weeks ago.

Although Zillow has data extending back to January 2018, it has greatly expanded its coverage in recent years, which makes its older data less directly comparable to its more recent data. For our analysis, we'll focus on the period from January 2024 through August 2025 because this data is most similar in its scope of coverage to the data for August 2025.

From here, we'll treat Zillow's data for new construction sales for single family residences and condominiums just like the Census Bureau's new residential sales data for our analysis. The following charts present the U.S. new home market capitalization, the number of new construction sales, and their average sale prices as measured by their time-shifted, trailing twelve month averages from January 2024 through August 2025.

A falling trend for new construction sales:

A rise and fall in the trend for prices:

Starting with the chart showing the total valuation of new construction from January 2024 through August 2025, we'll start by noting August 2025's total valuation of $22.26 billion from Zillow's new construction is about 73% of our initial estimate of $30.53 billion for the total value of all new homes sold based on the U.S. Census Bureau's data in August 2025. That's large enough for Zillow's data to provide a good indication of the overall state of the U.S. new home market.

The trend data, indicated by the time-shifted trailing twelve month average (orange) in the chart shows the new home market was largely flat from January 2024 through August 2024, but has been slowly falling off in the year since.

That mirrors similar trends for the number of new construction sales over the same period of time.

The trend for the mean sale price of new construction shows a different pattern. Here, average sale prices rose from May 2024 through December 2024, but have fallen off in the months since. First slowly from December 2024 through May 2025, then more steeply.

That pattern indicates 2025 has been a difficult market for the builders of single family homes and condominiums. Although they've been lowering prices since the end of 2024, it hasn't been enough to reverse the downtrend in the number of sales. A good portion of that problem has been tied up with elevated mortgage rates, which have made new homes less affordable than they would otherwise be had these interest rates been lower. The problem of unaffordability is harming the market for new homes. And by extension, Americans seeking to become new homeowners.

The analysis that falls out from using Zillow's data on new construction homes largely squares with the analysis we've been doing for years with the Census Bureau's new home sales figures. The government shutdown isn't an obstacle for reading the state of the U.S. new home market.

References

Zillow. New Construction Sales Count. [CSV Document]. 16 October 2025. Accessed 28 October 2025.

Zillow. New Construction Mean Sale Price. [CSV Document. 16 October 2025. Accessed 28 October 2025.

Image credit: U.S. Census Bureau: New Single-Family Homes Sold Not as Large as They Used to Be.

As the third quarter of 2025 ended, the market capitalization of the S&P 500 (Index: SPX) added up to $59.32 trillion.

Four weeks later, Slickcharts estimated the total market cap of the index adds up to $62.25 trillion.

Yesterday, the three biggest component stocks of the index, Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL) had one of their best trading days. NVDA's stock flirted with reaching a $5 trillion valuation, while the stocks of both Microsoft and Apple both surpassed $4 trillion in market value during the trading day, only for AAPL shares to fall below the level by the close.

Together, these three stocks alone account for more than one-fifth of the total value of the S&P 500 index. The following chart gives an indication of how much of the index' total market cap is accounted for by these three $4+ trillion firms.

Going into the trading day of 29 October 2025, it looks likely that NVDA will soon become the world's first $5 trillion company. FXStreet estimates that will officially happen when NVDA's share price closes above $205.36.

Our own back-of-the-envelope math using Slickcharts' market cap data for the S&P 500 and NVDA's relative share of the index suggest the stock would have to close at or above $205.44 per share to reach that threshold, which is definitely in the same ballpark. Regardless of the actual stock price at which it happens, when combined with two other companies joining NVDA in the $4+ trillion valuation club, it's kind of the stock market equivalent of seeing a three-planet conjunction in the sky. It doesn't really mean anything, but it's cool to see happen for the first time ever all the same.

After pausing for nine months, the U.S. Federal Reserve resumed cutting interest rates on 17 September 2025. The Fed reduced the Federal Funds Rate by a quarter percent to a target range of 4.00-4.25%.

As expected, this action reduced the probability a recession will begin in the next twelve months. The recession forecasting method we've used to monitor the odds of recession starting in the U.S. indicates the recession probability has dipped from 26.5% six weeks ago to 23.7% as the Fed appears set to reduce U.S. interest rates further.

We anticipate that action will continue pushing the odds of a U.S. recession starting in the next twelve months down slowly because of the expected small size of its imminent rate cut. We project that in the next six weeks, the probability of a U.S. recession getting started in the next twelve months will be around 21%.

Then, assuming the Fed acts again in six weeks to cut U.S. interest rates by another quarter point, as is currently expected by the CME Group's FedWatch Tool, we should see the recession probability drop below the key 20% threshold in early 2026.

The following update to the Recession Probability Track shows how the probability of recession has evolved from 20 January 2021 through 15 September 2025 in the context of how the difference between the yields of the 10-year and 3-month U.S. Treasuries combined with the level of the Federal Funds Rate have changed over this time.

A 20% probability represents the "background" probability of recession for the U.S. economy. By this, we mean that if you packed a bag a marbles identified with every month and year the United States has been an independent nation and picked one at random, you would have a 20% chance of picking a marble with a date the U.S. economy was in recession. We plan to end this series after the probability of recession drops below this probability threshold.

However, that doesn't mean the U.S. economy is not experiencing recessionary conditions today, for which there are some indications of distress:

It often seems that economists are perpetually warning us about the next U.S. recession. One influential analyst says an economic slowdown is already a fact of life for many Americans.

Twenty-two states are “now experiencing persistent economic weakness and job losses that are likely to continue," said Mark Zandi, the chief economist at Moody’s Analytics, to MarketWatch. The overall American economy is “on the precipice. Government data released before the shutdown showed the “broader economy was in pretty good shape,” said MarketWatch, but some are skeptical. The gross domestic product might be rising, said Zandi, but the “job market is weaker.”

Other observers are warning of a bifurcated “K-shaped economy,” said CNBC. Wealthy Americans are “engaging their purchasing power,” but lower- and middle-class consumers are struggling with “rising costs on daily essentials like groceries and gas.” Meanwhile, “unofficial signals” like rises in missed car payments and women leaving the workforce are offering “early warning signs about what is to come,” said Quartz.

These conditions haven't developed in a vacuum. The onset of these conditions have coincided with elevated probabilities of recession that the recession forecasting model we track was projecting more than a year ago. Here's a short summary of when the model anticipated those conditions could develop into a higher likelihood of recession.

50% Probability of Recession

• 13 February 2023 through 29 November 2025

60% Probability of Recession

• 25 April 2023 through 29 October 2025

70% Probability of Recession

• 25 May 2023 through 8 October 2024
• 31 January 2024 through 29 March 2025
• 5 September 2024 through 20 September 2025

These are the periods the recession forecasting method predicts the National Bureau of Economic Research will someday identify as containing the month in which a period of economic contraction began. Note that we're still within the periods to which several of these heightened probabilities apply, which we've indicated with red boldface font.

The three sets of dates that apply for a 70% or greater probability of recession relate to a "triple-top" series of peaks the model has recorded since mid-2023.

The end of the first period at this greatly elevated recession probability coincides with when the U.S. Federal Reserve initiated a new series of interest rate cuts that took place between September and December 2024 to forestall a recession from starting in the U.S. during the 2024 election season.

The first two periods coincide with a period of anemic job growth in the U.S. economy, which is confirmed by Bureau of Labor Statistics data that has undergone two massive downward revisions in the last 13 months.

The third period coincides with the timing for when the Federal Reserve resumed cutting U.S. interest rates to address a slowing economy in September 2025.

The most important thing to take away from this retrospective analysis is that the recession model's forecasts for these elevated recession probabilities were set more than a year ago. Today's economic weakness has been baked in for a very long time.

Analyst's Notes

The recession probability we've presented is based on the Federal Reserve Board's yield curve-based recession forecasting model, which factors in the one-quarter average spread between the 10-year and 3-month constant maturity U.S. Treasuries and the corresponding one-quarter average level of the Federal Funds Rate. If you'd like to do that math using the latest data available to anticipate where the Recession Probability Track is heading, we have provided a tool to make it easy to do.

Previously on Political Calculations

We started this new recession watch series on 18 October 2022, coinciding with the inversion of the 10-Year and 3-Month constant maturity U.S. Treasuries. Here are all the posts-to-date on that topic in reverse chronological order, including this one....

• U.S. Recession Probability Falls After Fed Resumes Rate Cuts, Set to Fall Further
• U.S. Recession Probability as Fed Finally Set to Resume Rate Cuts
• U.S. Recession Odds Holding Mostly Steady with Fed Holding Off on Rate Cuts
• U.S. GDP Contracts as Recession Odds Tick Up with Fed on Hold
• Decline in U.S. Recession Odds Stalls with Pause in Fed Rate Cuts
• U.S. Recession Probability Plunges to 27%
• U.S. Recession Probability Drops Below 50%
• U.S. Recession Odds Fall with Fed Rate Cut, But Are Still Elevated
• Triple Top Pattern Locking In for U.S. Recession Probability
• Triple Top Developing for U.S. Recession Probability
• U.S. Probability of Recession in Next Twelve Months Hovers Near 70%
• Recession Probability Falls After Hitting Double-Top
• U.S. Recession Probability Nears a Double-Top
• Probability of U.S. Recession Resurges to Nearly 75%
• U.S. Recession Odds Recede to Two Out of Three Chance in 2024
• U.S. Recession Probability Continues Receding on All Hallow's Eve
• U.S. Recession Probability Starts to Recede
• Probability of Recession Starting in Next 12 Months Breaches 80%
• U.S. Recession Probability on Track to Rise Past 80%
• U.S. Recession Probability Reaches 67%
• U.S. Recession Probability Shoots Over 50% on Way to 60%
• Recession Probability Nearing 50%
• Recession Probability Ratchets Up to Better Than 1-in-6
• U.S. Recession Odds Rise Above 1-in-10
• The Return of the Recession Probability Track

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of Federal Reserve officials meeting with a carnival fortune teller as they decide how to change interest rates".

The S&P 500 (Index: SPX) clocked another record high for 2025, rising 1.9% over its previous week's close to 6,791.69 at the end of trading on Friday, 24 October 2025.

With the fourth quarter's earnings season under way, good earnings reports and optimism about the prospects for future earnings helped solidify stock prices early in the week. On Friday however, stock prices rose as investors absorbed two new pieces of information.

The first of those two new pieces of information was the shutdown-delayed release of the Consumer Price Index, which confirmed inflation during September 2025 had come in slightly lower than had been expected. That was significant because it clears the way for the Federal Reserve to continue cutting the Federal Funds Rate.

The CME Group's FedWatch Tool forecasts the Fed's next action will be to reduce this rate by a quarter point on Wednesday, 29 October (2025-Q4). Looking beyond that date, the FedWatch tool predicts the Fed will deliver another quarter point when it next meets to set rates on 10 December (2025-Q4).

The second new piece of information was the confirmation U.S. President Donald Trump would meet with China's President Xi Jinping to potentially unveil a new trade deal between the two nations at the Association of South East Asian Nations (ASEAN) summit within the next several days, which added a speculative boost to the S&P 500 because it prompted investors to shift their time horizon from 2026-Q2 to 2025-Q4.

That shift can be seen in the latest update of the alternative futures chart, which visualizes the potential trajectories the S&P 500 may take depending upon how far into the future investors are focusing their forward-looking attention.

Next week could see more stock price movement related to news of trade deals made at the ASEAN summit. Until then, here are the market moving headlines that shaped investors' future expectations during the trading week ending on 24 October 2025:

Monday, 20 October 2025

• Signs and portents for the U.S. economy:
• US-China trade war clouds global economic outlook as 'new normal' emerges
• Trump approves expanding credits for US auto production, issues new 25% truck duties
• China imports no US soybeans in September for first time in seven years
• Oil prices slip on concerns over a supply glut
• US regional banks' earnings under scrutiny with jitters over credit risks
• Investor behind Zions, Western Alliance bad loans is tied to $270 million in troubled debt
• US bank rout prompts deal speculation as credit worries loom
• US bets on Australian miners to break China's grip on critical minerals supply
• US, Australia to invest $2 billion in critical minerals, advance Alcoa gallium project
• Bigger trouble, stimulus developing in China:
• China's economy slows as trade war, weak demand highlight structural risks
• Instant View: China Q3 GDP growth slows to 4.8% y/y, in line with forecast
• Fall in China's exports of rare earth magnets stokes supply chain fears
• China's new home prices fall at fastest pace in 11 months
• BOJ minions trying to be mysterious about what they're going to do for some reason:
• Bank of Japan's Ueda keeps cards close to chest ahead of October meeting
• Hawkish BOJ board member keeps up calls for more rate hikes
• BOJ may slightly revise up this year's growth forecast, sources say
• Wall Street ended higher ahead of a busy earnings week and inflation data
• Wall St ends sharply higher as earnings optimism fuels risk appetite
• Why stocks and gold are rallying together like it's 1999 and 1979 simultaneously

Tuesday, 21 October 2025

• Signs and portents for the U.S. economy:
• Oil settles higher as investors focus on supply signals
• US seeks 1 million barrels of oil for Strategic Petroleum Reserve
• Fed minions expected to deliver two more rate cuts before end of 2025:
• US Fed to trim rates twice more this year; 2026 rate path very unclear
• Waller says Fed staff studying streamlined 'payment accounts'
• Bigger trouble, stimulus developing in China:
• Foreign Investors Trapped in China’s Real Estate Meltdown as $140 Billion Bet Unravels Further
• China's consumer subsidy scheme needs a rethink
• BOJ minions get new big boss who wants to see wage-price inflation:
• Japan's Takaichi calls on BOJ to pursue inflation driven by wage gains
• Japan's next finance minister could unsettle yen bears
• ECB minions worrying about US dollar:
• ECB's Lane flags dollar risk for banks amid tariff turmoil
• Wall Street closed mixed as traders digested a wave of earnings data
• Wall Street ends mixed as earnings lift the Dow
• Gold retreats after record rally, on track for biggest daily drop since 2020

Wednesday, 22 October 2025

• Signs and portents for the U.S. economy:
• Oil rises about 2% on higher US demand, trade talk optimism
• Exclusive: US considering curbs on exports to China made with US software, sources say
• India nears deal to slash US tariffs on Indian imports to 15%-16%, Mint reports
• Fed minions thinking big banks may not need to stash so much capital:
• US Fed floats plan with smaller capital hikes for big banks, Bloomberg News reports
• US banks' surge in loans to private creditors may pose risks, Moody's says
• BOJ minions expected to hike Japan's interest rates as Japan's export economy shows recovery signs:
• BOJ poised to hike interest rates in Q4, majority of economists say
• Japan's exports snap four-month slump as weak yen offsets US tariff hit
• ECB minions / Bigger trouble developing in Eurozone:
• China overtakes US as Germany's top trading partner
• Airbus opens second jet assembly line in China as it targets production growth
• Nasdaq slumps more than 1% as Netflix's plunge drags Wall Street lower
• Netflix's blockbuster run loses spark amid valuation jitters
• A $619 Million Surprise Hit Netflix's Margins
• Wall Street ends lower on mixed earnings, revived US-China trade tensions

Thursday, 23 October 2025

• Signs and portents for the U.S. economy:
• Oil surges as Russia sanctions roil market, but western enforcement is key
• Exclusive: China state oil majors suspend Russian oil buys due to sanctions
• Russia, at war, faces double trouble: Trump ultimatum and a hit to oil sales to India
• China, U.S. to hold trade talks in Malaysia as truce deadline nears
• US existing home sales hit 7-month high; affordability remains a challenge
• Fed minions working on a new scheme for setting U.S. interest rates:
• Dallas Fed chief's rate target reform welcomed amid very uncertain timetable
• Bigger stimulus developing in China:
• China's new five-year plan sharpens industry, tech focus as US tensions mount
• BOJ minions get mixed economic data to cloud their plan to hike Japan's interest rates:
• Japan's core inflation accelerates in September, stays above BOJ target
• Japan's factory activity hits 19-month-low in October, PMI shows
• Wall Street ended higher as Trump–Xi meeting was confirmed
• Wall St ends higher amid mixed earnings, Trump-Xi meeting confirmed

Friday, 24 October 2025

• Signs and portents for the U.S. economy:
• US consumer inflation cools in September; shutdown threatens next report
• VIEW US consumer prices increase less than expected in September
• Oil climbs for second day on supply fears due to US sanctions on Russian companies
• Fed minions expected to deliver rate cut next week, thinking about undoing excessive regulation on banks:
• 'Cooler' Than Expected CPI Data Leaves Fed On Track For Rate-Cuts
• Fed seen headed for more rate cuts as inflation undershoots expectations
• Fed to hand banks a win with proposed 'stress test' overhaul
• Bigger trouble, stimulus developing in China:
• US launches investigation into China's compliance with 2020 trade deal
• Growth signs developing in Eurozone:
• Euro zone business activity growth accelerates as demand jumps, PMI shows
• Wall Street notches record close after soft CPI data, posts best week since early August
• Wall Street notches record closing highs on cool inflation, solid earnings

The Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the recently ended 2025-Q3 remained unchanged at +3.8% with data reports on hold because of the Senate Democrats' ongoing refusal to fund government operations. The BEA's official estimates of GDP will be on hold as well.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull who is happy with a lower-than-expected inflation report and upcoming trade talks between U.S. President Trump and China's Chairman Xi", followed by a second prompt: "Add another speech bubble that says "No wonder the S&P 500 set a new record high!"

How much income does the household in the exact middle of the income distribution in your state earn in a year?

Visual Capitalist's Niccolo Conte and Joyce Ma tapped the results of the U.S. Census Bureau's American Community Survey for 2024 to find out. They produced the following map to visualize what they found within the United States:

Conte summarizes where the highest and lowest incomes earned by the typical household in each state within the United States are to be found:

High-Earning States Concentrated on the Coasts

The states with the highest household earnings are heavily concentrated along the coasts, with Colorado being the highest-earning landlocked state at ninth on the list with $97,113. Utah is the next non-coastal state with a high level of household earnings at $96,658, ranking 10th overall.

The eight coastal states ahead of Colorado and Utah all had a median household income of at least $99,000, all at least 20% above the national median household income.

These coastal states benefit from robust technology, professional services, and government sectors that tend to offer higher-paying jobs, while also often having higher costs of living.

Southern States Lag Behind the National Median Income

States in the South continue to have many of the lowest household incomes in the U.S., often trailing significantly behind the national median of $81,604.

After Mississippi at $59,127, the next two lowest-earning states were West Virginia ($60,798) and Louisiana ($60,986).

Other states below $65,000 (20% below the national median) were Arkansas and Kentucky with $62,106 and $64,526 in median household income respectively.

While these figures are significantly below the national median, they do coincide with lower housing and living costs, providing a more balanced standard of living.

While not a state, Washington D.C. holds the top position, with a household at the 50th percentile in the nation's capitol collecting an annual income of $110,000. At the other extreme, a household in Mississippi, the lowest ranking state for median household income in 2024, earns $51,000 a year less.

References

Niccolo Conta and Joyce Ma. MiscMapped: Median Household Income by U.S. State. Visual Capitalist. [Online article]. 15 October 2025.