CrystalBull Home Price Indicator ChartThis chart shows the year-over-year changes in the CrystalBull Home Price Index along with Average and Median New Home Price, in relation to the S&P 500.
Note that historically, home prices have trended along the inflation line, with over-bought and over-sold periods. Note also that our prediction in 2009 was accurate: "Expect home prices to start reverting to the mean later this year (after the pending wave of foreclosures and resets)." Home prices should start stabilizing here. A strengthening economy will try to push home prices higher, while the resultant rising interest rates will keep prices in check. Yes, there will be some volatility as home prices find their new, stable levels. US Home Prices generally follow rising wages and economic growth, and are an indicator of economic strength. Since Housing represents a rather large portion of gross domestic product, it is an important data set in market timing methods, and stock investing.
( HINT: Click-and-drag left-to-right on the top chart (S&P 500) to zoom in to a specific date range. Double-click on S&P 500 chart to zoom back out. )