Real estate is a data-driven industry. Many statistics and figures are used in daily conversation to describe shifts in the market. As an agent, you need to be familiar with this data. You need to be able to understand what they mean and interpret any changes.
To help you get started, we’ll review 27 real estate statistics that are essential to any real estate business.
New Home Sales
New home sales is a housing market statistic that measures the sales of newly built homes over a given period. It provides a broad view of activity in the housing market. For example, an increase in new home sales suggests demand is picking up. Because changes are often seen in new home sales before the market at large, new home sales is considered a leading indicator. The statistic is also a sign of the health of the U.S. economy because an increase in new home sales suggests an increase in consumer confidence and spending. The most closely watched data on new home sales is the U.S. Census Bureau’s New Residential Sales, released around the 20th of each month.
Existing Home Sales
Existing home sales measures activity in the housing market with emphasis on homes that have been owned and occupied before coming on the market. Existing home sales is an important statistic because existing homes make up more than 90 percent of total home sales. But unlike new home sales, existing home sales is considered a lagging indicator, meaning it summarizes known trends in the market. The leading source for existing home sales is NAR, which releases data at the end of each month.
Housing starts is a statistic for the number of new residential construction projects started in a given period, where started means excavation has begun. While new and existing home sales tell us about demand, housing starts tell us about supply. If starts fall for one segment of the market, but sales for that segment remain flat, an analyst might forecast a shortage in the market and price increase. More broadly, housing starts is considered an indicator of the economy at large, where a long period of increasing housing starts is considered a sign of strengthening economy. Housing start figures are published monthly by the Census Bureau.
Median Sale Price
Median sale price provides the price of the typical home sale. Median sale price is sometimes preferred to average price because it is less likely to be skewed by a small number of really expensive (or really inexpensive) sales. Looking at median sale price over a period of several months can give agents a sense of how prices are moving in the market.
Price growth is a measure of the movement in housing prices month to month often presented in percentage change. A large positive percentage change from one month to the next suggest demand is outpacing supply and prices are increasing rapidly.
Active listings is the number of active listings on the market for a given period. Analysts often watch for movements in this figure in comparison with other figures. If sales, active listings and inventory move together it is a sign that the market is in balance. New demand is being met with new supply. If one or more of these figures move separately from the others, the market may be becoming more imbalanced.
Months Supply of Inventory
While active listings provides a measure of the supply of listings in the market, it is unstandardized. You cannot really compare active listings in New York City with active listings in Hershey Pennsylvania due to the differences in market size. Month supply of inventory addresses this by taking into account current rate of sale. How is it calculated? Consider the current number of active listings. Assume no more listings are added to the market. Now consider the current sales rate. At this rate, how long until the current stock of listings is depleted? This is months supply of inventory.
Median Days On Market
Median days on market captures the age of the typical real estate listing. The statistic is computed by finding the number of days from the time a house is listed for sale to when it is sold, and then taking the median. Sellers and agents want homes to sell quickly, so median days on market is a sign of the strength of the real estate market. If median days on market falls for several consecutive months, an analyst may conclude that demand is picking up and prices may soon rise.
Average Mortgage Interest Rate
The mortgage interest rate is the interest charged on a home mortgage. Because these rates vary state to state they are often averaged to provide easier month to month comparisons. Rising mortgage rates make borrowing more expensive. This can have the effect of cooling the housing market and pushing prices down.
Housing Affordability Index
Housing affordability is a major economic and political issue. NAR attempts to quantify housing affordability with itsHousing Affordability Index. The statistic compares the income of the typical American family with the income requirements for a typical home mortgage. An index of 120, suggests that on average families have 120 percent of the income necessary to qualify for a home.
Pending Home Sales Index
NAR’s Pending Home Sales Index provides a measure of activity in existing home sale contracts. Before a home sale is complete, it goes to contract and is listed as pending on the MLS. NAR collects information on pending listings from more than 100 MLS around the country. It then estimates the number of pending listings nationwide. A PHSI of 100 is considered high contract activity. This is because 100 suggests pending sales match the average pending sales for 2001, a historic year. Since the vast majority of pending sales become actual sales, PHSI is a leading indicator for existing homes.
Payment for a home occurs over a period of 30 years. During this period, an owner makes monthly contributions to pay off her mortgage loan. Ownership equity is the market value of the home minus the remaining balance on the mortgage. Another way to think of it is the share of the home the owner actually owns. As the owner approaches the end of the mortgage, the ownership equity (or ownership share) approaches 100 percent. Ownership equity is important because it is a financial asset. Homeowners can borrow against equity like any other financial asset and use the money as they see fit.
Distressed Property Sales
Distressed property sales typically involve a lender seeking to recoup costs. They are conducted urgently and often below market value. If distressed property sales are rising, an economist may conclude that owners are having more trouble affording their home. This is a sign of slowing economic growth.
Mortgage Delinquency Rate
Mortgage delinquency rate estimates the percentage of homeowners nationwide that are late on their mortgage payment. Produced quarterly by the Federal Reserve Bank of St. Louis, the mortgage delinquency rate captures the general economic position of American homeowners. If delinquency rates rise of a period, we can say that more people are struggling to make ends meet.
Mortgage Purchase Applications
Before receiving a mortgage for a property purchase, borrowers must apply. The Mortgage Bankers Association, a trade group for real estate finance, provides an estimate of the number of mortgage applications nationwide with its Weekly Applications Survey. If applications are increasing we can conclude that lenders and borrowers are feeling more confident about their ability to purchase a home, a positive sign for the general economy.
Foot Traffic is a NAR-produced statistic that estimates the number of properties shown by Realtors over the last month. The statistic provides a year-to-year comparison of showing in the roughly 200 markets surveyed. A Foot Traffic Index of 50, suggests that half of these markets experienced stronger foot traffic compared to the same month last year. According to NAR, Foot Traffic is strongly correlated with future contracts and home sales, so an increase in the Foot Traffic Index should forecast and increase in sales two to three months later.
Home Price Expectation Survey
The Home Price Expectation Survey is a quarterly release from Zillow and Pulsenomics that polls more than 100 real estate economists and investment experts on their predictions of home value growth, mortgage rates, and other housing market indicators. The survey questions rotate, providing a general overview of the real estate climate from the perspective of industry leaders.
Mortgages 90 Or More Days Delinquent
It is a bad sign for the housing market, and the economy generally, if homeowners are not able to meet their mortgage obligations. This is why economists and analysts pay attention to delinquent rates. Mortgages 90 or more days delinquent is a common threshold for serious economic distress. The Consumer Financial Protection Bureau publishes aggregate data on mortgage delinquency rates. This information tells us, generally, how well homeowners are able to manage their debt.
Homeownership has long been associated with prosperity and stability. It is also closely linked with upward mobility and the American Dream. It is therefore useful to monitor homeownership across the U.S. The most common metric is homeownership rate, which shows the percentage of homes in the U.S. that are owned by their occupants. Homeownership rate has hovered between 60 and 70 percent over the last four decades, reaching a peak 69.2 percent in late 2004. One of the best resources for homeownership rate is the St. Louis Fed, which republishes Census data in a searchable graphic.
Real Estate Contribution to GDP
Real estate is known to have a large effect on the economy. From some government data we can know how much. TheBureau of Economic Analysis publishes quarterly figures estimating real estate’s contribution to GDP or its value added. This data shows that real estate has made up about 13 percent of GDP over the past five years. An increase in this share suggests that real estate is playing a greater role in the nation’s overall economic engine.
Housing Market Index
The Housing Market Index is a monthly survey released by the National Association of Home Builders that asks industry leaders to rate conditions in the U.S. housing market. The survey captures general confidence in the housing market and expectations for future sales.
FHFA House Price Index
The Federal Housing Finance Agency’s House Price Index provides a summary of movements in home prices every month. The index includes the change in home prices across the nation as well as details on the areas experiencing the fastest or slowest growth. The Housing Price Index tells us about affordability and market strength in the U.S. real estate industry.
HUD Fair Market Rent
Fair Market Rent is a broad estimate of the cost of renting produced by the Department of Housing and Urban Development for more than 2,500 cities and counties in the U.S. Officially used to calculate benefits under HUD housing programs, Fair Market Rents also serve as an important cost-of-living measure. Non-beneficiaries may monitor Fair Market Rents to see how renting costs change overtime and how they compare in different parts of the country.
Real Estate Unemployment
Like any other sector of the economy, real estate is subject to labor force fluctuations. The Bureau of Labor Statisticspublishes a number of data about the real estate workforce, including total employment, unemployment, and employment by occupation. These statistics give an overview of the size of the real estate labor force and demand for new entrants into the industry.
Real Estate Hourly Earnings
BLS also publishes data on wages within the real estate sector. Its statistics on hourly earnings and earnings by occupation show how real estate professionals are being compensated and how the industry compares to others in terms of pay.
Residential Energy Consumption
Housing costs are not limited to mortgage or rent payments. They also include utilities such as electricity, gas, water, and Internet. The Energy Information Agency provides a window into these extra costs with its Residential Energy Consumption Survey. This survey estimates the amount of energy residences are using and their ability to cover their energy bills.
Rental Vacancy Rate
Rental vacancy rate shows the share of rental properties that are vacant. This statistic shows the general relationship between supply and demand in the rental market. For the past 50 years, rental vacancy rates have fluctuated between 5 and 11 percent. Figures closer to 11 percent, suggest a large amount of supply for rental properties. Figures closer to 5 percent suggest larger demand.
Now you know and understand 27 essential real estate statistics. Questions or feedback? Leave them in the comments. For related Realtyna blogs, check out How Does Real Estate Affect the Economy and How Does The Real Estate Market Work?