Economic Indicators That Will Help You Understand the Housing Market
From home prices and sales to construction and mortgage rates, these are the real estate gauges to watch.
Concern seized the U.S. housing market in late 2018, prompting discussion about an impending slowdown, a recession even. After home prices skyrocketed earlier in the year, the back half of last year ushered a softening that invoked comparisons to the real estate crash of a decade ago. Yet by the onset of 2019, anxiety seemed to have thawed as the billowing headwinds failed to topple the market.
“The U.S. real estate market looks like it is on solid ground” this year, says Ralph McLaughlin, deputy chief economist at business intelligence firm CoreLogic.
Another housing market crisis is unlikely in the immediate future, primarily because the trouble-prompting factors of the mid-2000s aren’t present today. In the pre-bust period, subprime loans stirred up demand and hurled the market into overdrive, whereas today, tight supply reigns, coupled with stern mortgage requirements.
This peculiarity, however, spawns its own issues. High home prices and low inventory, which dominated 2018, erode affordability that further suffers when mortgage rates spike. Such “pain points,” McLaughlin says, often fester rather gradually, as the real estate market moves slowly compared to the stock market.
Even with a slow-moving market, certain industry indicators offer a prognosis to buyers, sellers and investors alike. Several such gauges, when measured collectively, could measure the vitality of mostly any housing market under nearly any economic condition.
Here are the indicators you should keep an eye on to better understand the future of the housing market:
- Home prices
- Home sale volume
- Available housing inventory
- Mortgage rates
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