The stock market has the Dow Jones Industrial Average, the S&P 500 and many sector indexes. Commodities have many indexes. Bonds have the Merrill Lynch Domestic Master.

How will we really track the performance of the various thousands of homes listed and sold (or not sold) within the United States.

We have learned in 2007 and 2008 that, for the first time, we have a tendency to have the national real estate bubble in response to national real estate industry trends. Home sales are still local.

Multiple listing services have the costs for local homes whether or not in Smalltown Wyoming or Manhattan New York City. Plus, a fair variety of homes are sold by owner.

And although real estate agents can „compare“ houses, they’re different. Two houses in the identical neighborhood might sell for the identical price. The primary one has an extra bathroom. However the other one has a larger swimming pool. The first has a home theater. However the other one is in a quieter location. The first one had an additional experienced real estate agent handling the sale. And so on.

The quantity of things affecting a house’s final sale worth is numerous and solely the plain ones are quantifiable.

But, 2 indexes have a go at it.

The Federal Housing Finance Agency (FHFA) puts out the Housing Price Index (HPI).

This index began with the Office of Federal Housing Enterprise Oversight (OFHEO) within the fourth quarter of 1995. However the OFHEO has been merged with Federal Housing Finance Board (FHFB) and also the U.S. Department of Housing and Urban Development (HUD) government-sponsored enterprise (GSE) mission team to make FHFA. FHFA regulates Fannie Mae, Freddie Mac and also the twelve Federal Home Loan Banks.

The Housing Price Index is weighted, seasonally adjusted and purchase-only. It’s calculated using sales value data from Fannie Mae and Freddie Mac conforming, typical loans on single-family properties. This is regarding forty percent of U.S. mortgages.

(Thus, it is not a smart guide for determining what is happening in the posh home market where prices are on top of the conforming loan limit.)

It’s primarily based on over five million repeat sales transactions. And it’s compared with information collected by Fannie Mae and Freddie Mac since 1975. It divides the United States into Metropolitan Statistical Areas (MSA) and Metropolitan Divisions (MD) as outlined by the Office of Management and Budget. It covers all nine census divisions, all fifty states and also the District of Columbia and every one MSAs except Puerto Rico.

The S&P Case-Shiller Index National Composite Index underlie futures contracts at the Chicago Mercantile Exchange. It’s based on a three-month rolling average of repeat sales in twenty metropolitan areas. It uses data obtained from county assessor and recorder records. However by focusing on large metropolitan areas, it captures 75% of home sales by dollar-volume. It also employs measuring repeat sales.

Fiserv Inc., a provider of IT services, is that the calculation agent for the S&P/Case-Shiller indices. It goes back to 1987.

Each indexes no doubt give a good approximation of the entire U.S. home market. But, those folks living in areas outside the twenty areas measured by S&P Case-Shiller should not depend on that to understand what’s happening in our local markets.

Another great article by Toronto Condominiums