What it measures:
- FHFA House Price Index – Measures the change in the purchase price of homes with mortgages backed by the Federal National Mortgage Association or Fannie Mae and the Federal Mortgage Acceptance Corporation or Freddie Mac.
- S&P/CS Composite-20 HPI – Measures the change in the selling price of single-family homes in 20 metropolitan areas.
- Building Permits - the amount of new residential building permits issued in the previous month.
- Housing Starts - the annualized number of new residential buildings that started construction the previous month.
- New Home Sales - The annualized number of new single-family homes that sold during the previous month.
- Pending Home Sales – Measures the change in the number of homes contracted to be sold but still waiting for the closing transaction, excluding new construction.
- Existing Home Sales – The annualized number of residential buildings that were sold the previous month, excluding new construction.
What effect it has:
If the actual housing market number comes out greater than a consensus of economists forecast, then that will tend to raise the value of the currency, and vice versa.
How often it is released:
- FHFA House Price Index or HPI– released monthly, typically 55 days after the end of the month reviewed.
- S&P/CS Composite-20 HPI – released monthly, typically 60 days after the end of the month reviewed.
- Building Permits – released monthly, typically 17 days after the end of the month reviewed.
- Housing Starts - released monthly, typically 17 days after the end of the month reviewed.
- New Home Sales – released monthly, typically 25 days after the end of the month reviewed.
- Pending Home Sales – released monthly, typically 35 days after the end of the month reviewed.
- Existing Home Sales – released monthly, typically 24 days after the end of the month reviewed.
Why it is important:
The housing market is a major indicator of the nation’s overall economic health and has a domino effect on the rest of the economy. More building means more construction workers are employed which adds money to the economy in the form of consumer spending and creates more jobs.
In addition, construction requires material that also adds to the flow of money into the economy and home sales require mortgages which stimulate the banking sector. Many more aspects of the economy are affected by the housing market and directly affect the overall economic health of the nation.
Basically, housing and building construction are one of the basic activities in an expanding economy. When housing and building starts begin to show weakness, it is a leading indication that the rest of the economy will soon follow suit. This makes the housing indicators extremely important to anyone involved in banking and investment, as well as to the Federal Reserve which uses these indicators, among others, to determine how they deal with interest rate and monetary policy.
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