A guide to real estate and housing market indicators

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Housing market indicators give us an idea of real estate trends across the country. Analysts use these indicators to predict the future of the housing market. As a buyer or seller, it’s important to note that many of these indicators directly affect supply and demand.

We’ll discuss some of the most important housing market indicators and why they matter.

Housing affordability

What it is: Definitions vary, but the Department of Housing and Urban Development (HUD) uses a guideline that housing is affordable if it costs no more than 30% of your monthly pretax income, including utilities.

To check your own numbers, use our housing affordability calculator.

Why it matters: Housing affordability levels make home buying accessible to potential purchasers or can lock them out of the market. There are various indexes that track home affordability. One of the more prominent ones comes from the National Association of REALTORS^® (NAR).

The NAR index has a default weight of 100. If the number is higher than this mark, the median income is more than enough to afford the median cost of a home. If it’s lower than 100, the median income isn’t keeping pace with home prices. In the latest August 2025 data, the index stood at 100.5. Metro indexes complement this national number.

Ultimately, the percentage of income that should be spent on a mortgage depends on your personal financial situation. Always be aware of your other financial goals and your rainy-day savings funds.

Rental affordability

What it is: HUD again defines affordability as spending no more than 30% of your income, but the standard is applied to rental housing units. You may see these referred to as rental affordability indices (RAI).

Why it matters: Rental affordability can be a good indicator of how expensive it is to live in an area, even if you’re not looking to put down permanent roots. Again, the amount spent on rent depends on personal budgets, but 30% is often considered the dividing line between higher and lower affordability.

Supply and demand in real estate

As in many markets, supply and demand in the housing market are huge drivers of affordability. There are several metrics that we tend to look at.

Housing supply

What it is: Housing supply is the amount of inventory available on the market. The most useful metric in this area is often months of supply, which measures how many months it would take to sell the current housing stock at the current pace of sales.

Why it matters: The amount of housing supply will help you determine whether it’s a buyer’s or seller’s market. A traditional metric looks at months of supply and the market based on the current pace of sales. While our friends at Redfin track this in their housing market data center, they also have a metric that estimates the number of buyers and sellers in an area.¹

Taking a look at months of supply first, this is at 3.7 months nationwide. It should be noted that this is widely variable depending on where you’re at. In San Francisco and San Jose, California, this is as low as 1.7 months. At the other end of the spectrum, it’s as high as 8.1 months in Miami.

But inventory doesn’t always tell the whole story. Nationwide, there are 46.86% more sellers than buyers in Redfin data. When looking at regions, this difference goes from there being 129.77% more sellers compared to buyers in Nashville to Nassau County in New York State, where there are 38.31% fewer sellers than buyers.

Home sales

What it is: This is the number of sales taking place in a geographic region within a given time frame. There are also pending sales indicators that show homes under contract.

Why it matters: Home sales can be a useful indicator of movement in and out of a market. While these tend to be backward-looking, they can be an indicator of general market trends. The Census Bureau and HUD jointly release a report on sales of newly constructed homes, while NAR releases one on existing homes. As of May 2026, the seasonally adjusted rate for new home sales was 580,000. The existing home sales rate came in at 4.17 million, according to NAR.

The Redfin Data Center includes weekly and monthly data on both completed home sales and pending home sales in markets across the country.

Home prices

What it is: These indexes either look at home prices themselves or use a weighted average in comparison to a baseline to give directional trends. For example, Redfin tracks the median listing price; the Redfin Home Price Index measures pricing on repeat sales to show relative changes in prices over time.

Why it matters: If you’re a home buyer or seller, the home price you can expect to receive or offer is the bottom-line number. Together with individualized tools such as comparative market analyses conducted by real estate agents, this gives home buyers and sellers an idea of what to expect.

Nationwide, prices are up 2.13% for the year as of April 2026. At a Metro level, San Francisco leads the way with 10.79% price growth since last April. Meanwhile, Dallas is down 3.51% on the other side of the ledger.

National homeownership rate

What it is: This looks at the percentage of homeowners in the U.S. who own their homes. According to Census Bureau data, the homeownership rate for Q1 2026 was 65.3%.

Why it matters: Generally speaking, when the economy is in a state where more people own their homes, it bodes well for affordability. More people who want to be homeowners are becoming homeowners.

Home-building indexes

Builders are focused on profit margin to support their businesses. As such, they are only going to build when there’s a market to support the price they need to receive. While government housing projects don’t have the same monetary motive, plenty of private building indicates robust demand.

Housing starts

What it is: Housing starts track when ground is broken on new residential construction. Construction permits can also be a good advance indicator, but not all permits result in houses. Meanwhile, construction is also reported as complete, but by the time the home is built, it’s often spoken for.

Why it matters: “Housing starts are among the most closely watched forward-looking indicators in the residential real estate market because they reflect supply-side momentum, i.e., how many home builders are willing to greenlight projects given current cost and demand,” says Redfin Chief Economist Daryl Fairweather.

Simply put, more starts mean more supply, while fewer starts mean fewer units to go around. Starts were down 2.8% for the month but up 4.6% for the year, in the most recently available Census Bureau data from April 2026.

Construction spending

What it is: The Census Bureau tracks both public and private construction spending across the economy. It measures the cost of construction. Home buyers should pay particular attention to the residential construction figure in this report.

Why it matters: “Rising construction spending is an indicator of economic growth and a signal that builders and renovators feel good enough about the economy to commit money to home projects. It is also a strong predictor of local economic growth,” Fairweather said. “Metros with growing economies attract more residents, who require more housing.”

When builders have a surplus of housing, they may offer concessions such as free upgrades or temporary buydowns of mortgage rates.

According to the latest April numbers, residential construction spending is up 1.72% year-over-year.

NAHB survey

What it is: The National Association of Home Builders surveys its membership every month on current sales, expectations for the next 6 months, and traffic of prospective buyers. Numbers over 50 in the majority indicate greater market confidence, while numbers below 50 indicate market concern.

Why it matters: If builders are feeling more confident, they build more. Overall confidence is currently in negative territory at 35 as of June 2026. Future expectations for growth are also negative over the next 6 months at 45.

Home loan origination

The number of successful mortgage originations, or new loans closed, can be an affordability indicator because it suggests people are generally finding it easier to get approved and achieve their goals in the current interest rate environment. There are a couple of reports we can look at to track this.

Total mortgage originations

What it is: The Federal Housing Finance Agency maintains the National Mortgage Database, which includes the total number of mortgages closed in the U.S. each year.

Why it matters: Purely knowing the volume of lending each year can help you see the kind of market it is. If people are getting more loans, that means people are finding financial conditions easier.

The most recently available numbers go through Q2 of 2025, so the government gets somewhat behind in the statistics. The total number of originations for the year was 4.291 million. Totaling the number of originations through the second quarter of 2025 comes to 2.129 million, which is just under half of the 2025 total. That’s about right because there were limited market movements in 2025.

FHA originations

What it is: HUD maintains separate data on the number of FHA loans done monthly, as well as their characteristics.²

Why it matters: FHA originations are good for first-time home buyers and people with past credit issues because they offer low down payments and more flexible guidelines. The trends in this report help provide people with more insight into the availability of mortgage financing for those with imperfect qualifications.

Mortgage health indicators

There are indicators in the mortgage market that are also applicable to the broader economy as signs of strain. For example, if many are delinquent or going into foreclosure, it’s not only a harbinger of issues in the mortgage market, but it’s a sign that people are struggling because they tend to prioritize their house payment.

Mortgage delinquency

What it is: General mortgage delinquency refers to late payments. They start showing up on credit reports when people are 30 or more days late, which is when it’s visible to tracking agencies like the CFPB and FHFA.

Why it matters: While there is plenty of time at this point to either catch up or look into loss mitigation options, this is an early warning sign of how many consumers are having trouble making their mortgage payments.

Seriously delinquent mortgages

What it is: The NMDB and CFPB also maintain this database of mortgages that are 90 or more days behind in their payments.

Why it matters: This one is important because people are one month from foreclosure at this point. It’s a sign of the number of mortgages facing acute distress. As with the data that’s between 30 and 89 days late, these data points can be viewed at the state, county, or metro level.

Foreclosure auctions

What it is: The number of foreclosure auctions gives an idea of the overall health of the housing market. It indicates when lenders move forward with repossessing homes and selling them.

Why it matters: Local sources may be able to give you more granular data, but at a more top-line level, the real estate insights firm ATTOM™ tracks foreclosures at a state level, so you can get an idea of the health of the economy.

While the number has risen since last year, May 2026 foreclosure data showed that there were foreclosure filings on just one in every 3,562 housing units. If you’re a home buyer, you may be able to get a deal on a foreclosure, but they’re sold as is.

Homeowner equity trends

Home equity is the value of a home after subtracting the outstanding mortgage balance. It’s not a perfect correlation, for reasons we’ll get into, but increases in equity can suggest that home values are rising.

Increase in equity

What it is: Increases in equity mean that, over time, the combined mortgage payments and increases in property value mean that you owe less on your loan relative to the value of the property.

Why it matters: “Rising equity builds wealth and buffers against volatility in other investments, while falling equity increases financial risk,” says Fairweather. “Plus, when homeowners have a lot of equity, they can use their house as a bank account, pulling out money via a HELOC or cash-out refinance.”

According to ICE Mortgage, in March 2026, homeowners had $17 trillion worth of existing equity. $11 trillion of this was considered tappable, meaning homeowners could convert it while maintaining at least 20% equity.

Underwater borrowers

What it is: Being underwater on your mortgage means owing more on your home than it’s worth.

Why it matters: Homeowners can be underwater for a couple of reasons: either they bought the home and haven’t been able to make the payments regularly since, or the property value has actually declined. Either way, many underwater borrowers can indicate an unhealthy housing market.

Fortunately, the rate of underwater borrowers isn’t that high. As of May 2026, one estimate has the number around 1.7% nationwide.

The bottom line: Optimize your home purchase with market insights

Understanding real estate markets can help you in a variety of ways, from determining how much you can afford to what you should offer. Other indicators can help you gauge the health of the economy and where you might find a good deal.

Supplementing this knowledge with the insight from a real estate agent on the ground can help you be the most informed home buyer possible. Ready to learn more about what you might qualify for? Apply online.

¹ Rocket Mortgage is an affiliate of Redfin. You aren't required to use its lending services. Learn more at redfin.com/afba.

² Rocket Mortgage is not acting on behalf of FHA or HUD.

Rocket Mortgage and Redfin are trademarks or service marks of Rocket Mortgage LLC or its affiliates.