Pixel Tracker

Saturday, December 15 , 2018, 2:43 am | Fair 42º


Craig Greene: Interpreting Housing Economic Indicators

Here's background information on how key indicators track the condition of the market

Analysts, policymakers and investors closely follow economic indicators that track the condition of the housing market. Here’s some background information on these important indicators.

Housing Starts

Housing starts is considered the most important report on the housing sector because of its large ripple effect in the economy when buyers purchase appliances and household furnishings.

Construction of single-family homes accounts for about 85 percent of the industry. Work on multifamily units makes up the rest of the market and is considered highly volatile.

Home Sales

New homes sales account for less than 10 percent of the market. They are tabulated when the contract is signed.

This is different from the way existing home sales are tallied. They’re counted when the transaction closes and thus reflect contracts signed a month or two earlier. Existing home sales account for more than 80 percent of the market.

Another important home sales figure is the pending home sales index. This is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. Because it usually takes four to six weeks to close a contracted sale, it’s considered a leading indicator.

Housing Price Indices

There are two housing price indices: the S&P/Case-Shiller home-price index and the Federal Housing Finance Agency index.

The FHFA index is a national measure that tracks houses bought with mortgages purchased by Fannie Mae or Freddie Mac and excludes many of the foreclosure sales and properties bought with nonconventional mortgages. Homes with these loans did not experience the sharp rise and subsequent decline in prices throughout the past decade and represent a more stable pricing index.

In contrast, the S&P/Case-Shiller report is focused on large metropolitan areas and includes distressed properties and those bought with nonconventional loans such as jumbo mortgages. These home prices tend to be much more volatile.

— Craig Greene is a senior loan officer at Prospect Mortgage, 3916 State St., Suite 100, Santa Barbara 93105. He can be reached at .(JavaScript must be enabled to view this email address) or 805.898.4211.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made using a credit card, Apple Pay or Google Pay, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Select your monthly membership
Or choose an annual membership

Payment Information

Membership Subscription

You are enrolling in . Thank you for joining the Hawks Club.

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.
You may cancel your membership at any time by sending an email to .(JavaScript must be enabled to view this email address).

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.