by David Kranzler
Investment Research Dynamics
The DJUSHB (Dow Jones Home Construction Index) hit an all-time high on Thursday. The previous ATH was in July 2005. The current SAAR (seasonally adjusted annualized rate) for existing home sales as of the June report is 4.2 million. It’s the lowest sales rate since July 2010. The last time the DJUSHB was trading over 1,100 (July 2005) , the single family existing home sales rate was over 7 million.
Similarly, new home sales peaked in 2005 at a 1.4 million SAAR. The current annualized run-rate per the June new home sales report is just 776,000. The average price per home for new and existing homes back in 2005 was roughly equivalent to the current prices for each category. On an inflation-adjusted basis, homes were selling at higher prices 15 years ago. I’ll let you decide if the homebuilder stocks overvalued right now based on those statistics.