This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Two Housing Indicators to Follow Now

NEW YORK ( TheStreet) -- If you track the housing market closely, you are probably watching several indicators like a hawk, including existing home sales, new home sales, pending home sales and the Case-Shiller home price index.

But with rising rates threatening to dampen the housing recovery, you might want to add two more indicators to your list.

Bank of America Merrill Lynch economist Michelle Meyer in a report Friday highlighted two tools that could be useful to track the impact of higher interest rates on housing demand.

Weekly mortgage application volume is the "most timely and relevant," she wrote, with the data already showing a collapse in refinancing activity, which is typically more sensitive to interest rates. But the more important gauge of housing demand, purchase applications, has displayed a more choppy trend, rising 4.7% last week after declining 1.6% the previous week.

The biweekly University of Michigan Survey is another good indicator, according to the economist. The survey asks respondents if it is a good time to buy a home.

In May, 84% of the participants said yes, citing expectations of higher prices and also lower rates.

Analysts are divided on whether rising interest rates could hurt the housing recovery. Some believe that the prospect of a further rise in rates might end up attracting more buyers who have been on the fence about buying a home.

Meyer, however, says that the decisive move in interest rates may have caused a "payment shock." Some potential homebuyers may rethink their decision to purchase a home as they adjust to the idea of a higher monthly mortgage payment than they had originally expected.

Still, confidence that the rise in price will continue, combined with still-high affordability could offset the impact of rising interest rates, ensuring that the housing recovery remains on track.

-- Written by Shanthi Bharatwaj from New York

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $128.46 -1.50%
FB $78.97 -1.79%
GOOG $558.40 0.53%
TSLA $203.34 -1.86%
YHOO $44.28 -0.38%


DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs