Housing market activity (residential investment) contributes about five percent to the U.S. gross domestic product, taking into account investment in the construction of single and multi-family housing together with the remodeling costs, and other associated fees like broker fees. Thus, whether you are an investor looking to follow the broader economy or whether you are looking for indications about the state of the housing market, housing market indicators could provide input.
The U.S. Census Bureau puts out a monthly report on the construction spending activity, by dollar value, in the country. The report gives a breakdown by residential and nonresidential spending, as well as by private and public spending. It also provides the previous month’s activity and the previous year’s activity for the same month for comparison purposes.
Another U.S. government report on new residential construction looks at residential construction activity nationwide through the number of permits issued and houses that builders started to work on. There is a regional breakdown of the activity, as well as figures for the previous month’s and year’s activity.
The National Association of Realtors provides a report on the number of used homes sold every month, as well as previous month and previous year input, for single-family houses, condos, and co-ops. This report, based on actual home sale closings, also provides input on inventory, prices, and regional sales performance.
Various realtor groups in major states with significant housing activity – such as California, Florida, Illinois, and Texas – put out periodical reports on the sales activity and home prices in their respective states. These reports provide a more nuanced local-level market feel.
A government report on new residential sales provides input on the number of new homes sold nationwide, based on sales contracts signed. It looks at the sales broken down by region and by various price points, such as sales under $150,000 and higher than $750,000. Also, it looks at the inventory of new houses for sale and the median and average prices of houses sold.
Looking at the number of purchase contracts signed by buyers of existing homes, the National Association of Realtors produces a pending home sales index monthly report. This gives an idea about the level of sales closings to expect in upcoming periods. It also gives a regional breakdown of the pending sales activity and compares it to activity in the previous month and year.
The National Association of Home Builders puts out a monthly NAHB/Wells Fargo Housing Market Index that looks at the level of confidence that builders have in the single-family housing market. By taking a monthly survey of home builders, the NAHB gets input on how they feel about the current level of sales and buyer traffic, as well as their sales expectations for the upcoming six months. The index also provides regional input for the Northeast, Midwest, South, and West regions.
To get an idea about the level of home prices nationwide, which could provide a hint about buyer interest and general housing market optimism, there are also various price indices available. For instance, Standard & Poor’s puts out its S&P/Case-Shiller Home Price Index monthly. This looks at the national trend, as well as prices in certain metropolitan areas. There is also the Federal Housing Finance Agency’s House Price Index that uses input from Fannie Mae and Freddie Mac to track single-family home prices. And CoreLogic, Inc. has its own version of a home price index that looks at nationwide prices and also takes into account the impact of distressed sales.
There is a variety of input available for investors who are looking to get an idea about the state of the US housing sector. Used together, these indicators could help paint a picture of the health of the housing market.