Real Estate is the major source of investment for many Americans; in fact, over 60 percent of the average American’s equity is in his home. With so much riding on the value of your home, the overall performance of the real estate market is important, especially if you are getting ready to down-size or you need to tap into that equity for whatever reason. Rather than rely on economists and the media to interpret the performance of the real estate market for you, the following is a list of several signs that the market is improving.Pending Home Sales
“Pending home sales” is the number of homes that are under contract or otherwise entrenched in the process of selling. This measure is a good indicator as to how the real estate market will be in a few months – a higher number of pending sales indicates a stronger market. The National Association of Realtors (NAR) releases an index of pending home sales during the first week of each month.
“Housing starts” is the name given to new home construction. This is a good indicator because new construction is highly correlated with good market performance through the economy and is typically a precursor to a stronger housing market. The US Census Bureau keeps records as to the number of housing starts and publishes a quarterly report to that regard.
New and Existing Home Sales “New and existing home sales” is the name given to sales of new properties, put forward by, say a developer, and existing properties, referring to homes that have had occupants previously. These figures are kept by the National Association of Home Builders (NAHB) and are published monthly.
Home inventory is essential to the number of homes for sale at a given time. You can find this information through the NAHB, but it also pays to give attention to the number of homes for sale in your area. A higher number of homes for sale generally indicates a weak market.
Housing affordability refers to the average price of homes in a given area compared to the average income. Once again, this data is available at a national and state-level by the NAR, but it can be useful to seek this information out for your particular area.
The number of active and recent mortgage applications can also indicate the coming state of the housing market as people generally apply for a mortgage before beginning the search for a new home. The Mortgage Bankers Association (MBA) publishes this information weekly, as well as the number of those applications that are approved and denied.
Mortgage Interest Rates
Lower mortgage interest rates can act as an enticement to buyers, perhaps providing the motivation to go ahead with a purchase. However, the function of mortgage interest rates relative to the housing market is far clearer in terms of a higher rate and may deter buyers. When trying to estimate the future of the housing market as it pertains to your home, it is a good idea to keep this in the back of your mind.
These are some great numbers for builders to watch and monitor as you get ready for a new year. A key to success is the ability to spot trends earlier than everybody else.
It doesn’t take much just a bit and you will be in the lead for a long time.