Whether you are currently a homeowner or a renter looking to enter the housing market, it is important to understand housing data and learn to identify market trends. There are a few key data releases to pay attention to, and I will list them in the order of importance:
- Case-Shiller Index – Released monthly and tracks the pricing trends in a quarterly national market index, as well as a monthly10-city and 20-city composite index. In the latest release, both of the monthly indices were down year over year (3.9% and 3.8% respectively), after seeing some short term positive data releases over the last 12 months. This is precisely why it is difficult to determine the establishment of a trend until you see several consecutive monthly increases. A variety of factors such as weather, mortgage rates and release of new inventory will impact this data on a monthly basis, but the actual market sales activity will set the long term trend.
- Existing Home Sales – An economic indicator of both the number and prices of existing single-family homes, and co-op sales over a one-month period. For us in the South Florida market, I think this is an important barometer of current market conditions. The existing home sales report is released monthly by the U.S. National Association of Realtors and does not look at newly built houses or the sale of new houses. This indicator is thought to be a good measure of demand in the real-estate sector and has slipped again in the most recent period. These data releases often move up and down and may be a bit choppy before making a either a positive or negative trend. This index will often experience a flurry of signed contracts and then need to be revised downward a month or two down the line due to contract cancellations (contracts typically take 45-60 days to close or be cancelled). With the challenges in the mortgage market these days, cancellation rates have been at or near one third of all contracts signed.
- Mortgage Purchase & Refinance Data – This weekly data release from the Mortgage Bankers Association tracks the amount of purchase and refinance loan requests. It is a good leading indicator of interest in the housing market. New purchase loan origination will show that people are looking to buy a home, although they may never get the deal closed. Refinance loan applications are more interest rate driven. Since rates have finally been inching-up again, the refinancing data will slow.
- Housing Starts – I have listed this data release last on my list, because it is more of a macro read on the strength of the overall economy. This data point includes the number of residential building construction projects that have begun during any particular month. If the economy is strong, people are more likely to buy a new home. If you are a stock investor and track the home building sector, this would be a good indicator for you to monitor.
At Allied Realty Group, we understand that all asset classes experience market turbulence and fluctuations in value. Each segment of the real estate market will at some point be impacted by various economic conditions and cycles. Our office is located in Fort Lauderdale, Florida 33308 and we value local residential and commercial properties for financial institutions on a daily basis. We provide a full range of services designed to help our clients navigate today’s complex and dynamic real estate market and make well informed, intelligent decisions. Our clients rely on our advisory services to make buy-sell decisions, understand debt /equity markets and their impact on financing products, shape long-term portfolio strategies, evaluate development or redevelopment options and optimize investment returns.