From Builder Confidence to Home Prices: Eight Gauges of the US Housing Market

The trail starts before any permit is issued. The NAHB/Wells Fargo Housing Market Index surveys about nine hundred home builders on current sales, expected sales over six months and buyer traffic, then weights the answers into a score from zero to one hundred, with fifty as the line between a favorable and a negative outlook.

The US Census Bureau counts new privately owned housing units authorized by local permitting offices. A permit usually comes before ground is broken, so the figure leads housing starts by roughly one to two months and is a component of the Conference Board Leading Economic Index.

Published by the Census Bureau as Value of Construction Put in Place, this estimates the dollar value of construction work done in a month, with the release arriving about two months after the reference month. It spans private residential, nonresidential and public work, so it reads as a gauge of the whole construction sector rather than housing alone.

This Census Bureau series counts newly constructed single family homes sold, as a monthly count and as a seasonally adjusted annual rate. A new home sale reflects a buyer's decision around the time construction starts or finishes, which separates it from a resale of a home already standing.

The National Association of Realtors measures signed contracts for existing homes, condominiums and co-ops. A contract usually takes four to six weeks to close, so this index leads the same body's Existing Home Sales by a month or two, and a reading of 100 equals the average contract activity of 2001.

Here the contracts from the previous stop show up as closings. The National Association of Realtors counts previously built homes sold and closed in a month, and because resales are roughly 90 percent of the market by volume, the figure is a primary gauge of housing health, reported with median price and months' supply of inventory.

The S&P CoreLogic Case-Shiller index tracks prices by comparing repeat sales of the same individual home, which corrects for the changing mix of homes sold that a simple median cannot. Developed by Karl Case and Robert Shiller, it is published as a 20-city composite and a national index, and became the benchmark of the mid-2000s housing bubble and collapse.

The trail ends with the household outcome. The home ownership rate is the share of occupied housing units lived in by their owners, and it reflects housing costs, credit availability and income together. It is compared across demographic groups and regions to study disparities in access to homeownership.