The real estate market represents a significant portion of the overall economy of any given country. Therefore, changes in the real estate sector have a major impact on the stock market. This visualisation shows the various indicators that are used for measuring the health of the real estate sector. Some of these indicators for the US market are as follows -

• NAHB Wells Fargo Housing Marke Index - As per nahb.org, the NAHB/Wells Fargo HMI is a weighted average of three separate component indices: Present Single-Family Sales (SINGLE_FAMILY_PRESENT_INDEX), Single-Family Sales for the Next Six Months (SINGLE_FAMILY_FUTURE_INDEX), and Traffic of Prospective Buyers (MULTI_FAMILY_INDEX). Each month, a panel of builders rates the first two on a scale of “good,” “fair” or “poor” and the last on a scale of “high to very high,” “average” or “low to very low”. An index is calculated for each series by applying the formula “(good – poor + 100)/2” or, for Traffic, “(high/very high – low/very low + 100)/2”. Each resulting index is first seasonally adjusted and then weighted to produce the HMI. The weights are .5920 for Present Sales, .1358 for Sales for the Next Six Months, and .2722 for Traffic.

• S&P/ Case-Shiller U.S. National Home Price Index
• Existing Home Sales
• New Privately Owned Housing Units Authorised but Not Started
• Rental Vacancy Rates in the U.S.
• Housing Debt Service Payments as a Percent of Disposable Personal Income

and many others... If you track any specific indicator for the U.S. or any other country and the same is not available in the visualisation, please do not hesitate to reach out to our friendly team and we will endeavour to add your favourite data series. In addition to the above indicators in the secondary index, users can select any asset ticker of their choice in the primary index for U.S., India or Australian markets. 

Key Takeaways

Considering the dominance of the real estate sector as a percentage of the overall value of an economy, the direction of the housing market is considered one of the leading indicators that can have an impact on the direction of that country's stock market. Tracking the health of the real estate sector of the biggest economy in the world can certainly help an investor to make informed decisions about their investments.