As published in Scotsman Guide's Residential Edition, July 2009.
Every day, we're presented with economic reports whose results shape perceptions of the economy and its future direction.
It's important for mortgage brokers to be familiar with the economic indicators that have the greatest impact on lending. Understanding these reports helps us recognize current and developing trends that influence critical aspects of our business.
Here's a look at a few of the reports that should be on your calendar.
Home-value and -demand reports
1. S&P/Case-Shiller Home Price Index
According to Standard and Poor's, this index -- a subset of the larger Case-Shiller indices and based on single-family homes that have been sold at least twice -- tracks value changes in 20 metropolitan regions in the country.
The index helps investors, lenders and others follow real estate pricing and sales trends and understand pricing risk. Anticipating home-price trends -- which can increase or decrease homebuyer equity -- helps mortgage brokers more accurately establish credit policies.
Index results are released monthly and reflect data from two months prior. They're online at bit.ly/pXwlb.
2. National Association of Realtors' Pending and Existing Home Sales Indices
The National Association of Realtors (NAR) has developed two indices that measure sales activity for homes that are not new. According to the NAR, these homes account for a larger share of the market than new homes and are the best indicator of housing-market activity.
The pending-home-sales index looks at homes for which a contract has been signed but a loan has not closed. The existing-sales index measures the closed sales for these homes.
From this data, brokers can make inferences not only about the housing market's supply and demand but also about the entire economy in general. Greater purchase trends indicate consumers with the resources and credit to buy homes; this indicates a stronger economy.
The NAR releases its indices monthly. Schedule: realtor.org.
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