CHART(S) OF THE DAY: Contextualizing U.S. Housing Data

I won’t fully divulge the sauce ahead of our call tomorrow. But since this is meant as a peak behind the process evolution curtain, here’s a selection of core elements: 

1. Supply still leads Price:  The sequential change in months-supply remains a good predictor of 2nd derivative changes in home price growth
2. Price Growth still correlates with Equity Performance:  Housing related equity performance still tethers strongly to rate of change in HPI.
3. Macro Overlay:  The housing complex (where benchmark indices are generally builder-centric and/or broadly interest-rate sensitive cyclicals) shows consistent patterns of performance across varying growth and inflation regimes.  For example, housing equities perform well during Quad 1 and Quad 4 environments.   

The Chart(s) of the Day below illustrate the first two points above.