Gauging Confidence in the U.S. Housing Market

Confidence in U.S. housing markets is a prerequisite for stable real estate asset values and a healthy economy. Bold policy actions in recent years by the Obama Administration and the Federal Reserve Board have underscored the profound impact that housing market health can have on consumer sentiment and the macroeconomy, and these actions imply that traditional, lagging indicators of housing market conditions (for example, home price indices, real estate transaction volumes) are incomplete gauges of market risk. Like those of other asset classes, future levels of transaction volume and prices in residential real estate markets depend on the prevailing sentiments and expectations of market stakeholders. After several years of development, The U.S. Housing Confidence Survey (HCS), inspired by honorary advisers Karl Case and Robert Shiller and sponsored by Zillow Group, was launched by Pulsenomics LLC in January 2014 as the foundation for The Zillow Housing Confidence Index (ZHCI). 1 Pulsenomics now collects more than 10,000 completed HCS questionnaires from households across 20 of the largest U.S. metropolitan areas every 6 months and synthesizes the more than 350,000 HCS response data points compiled during each field period into freely available, comprehensible housing confidence metrics.(2) ZHCIs reflect assessments by individual households of prevailing market conditions, their home value expectations, and homeownership aspirations. Via these indices, housing confidence in the United States is quantified; variations in housing confidence and its key indicators can be monitored over time by geography, tenure, and key demographic variables. These data can ultimately contribute to better informed public policy, improvements in real estate market forecasts, and enhanced understanding of changes in macroeconomic activity.