Lately, various housing-market metrics such as existing-home sales, new-home sales, and mortgage applications have all been flagging. Last week, we learned that the U.S. homeownership rate was at a 19-year low, and some experts think it will never come back.
Unfortunately, almost all of the major housing market reports offer information on a huge lag. As such, it’s challenging to figure out if and when housing will turn.
In a new research note, Bank of America Merrill Lynch’s Michelle Meyer delves into Google Trends, which offer an interesting alternative up-to-date indicator of housing market sentiment.
“We queried the number of hits for “homes for sale”, limiting the sample to the US,” she wrote. “The results are encouraging: there has been a notable increase, particularly over the past year.”
But that’s only part of the story.
“The data suggests that people are searching for homes, but are they serious about buying?” she pondered. “We therefore search “mortgage calculator”. Presumably after a person finds a property of interest, a natural next step would be to determine if it is affordable. We have not seen an increase in such searches. Perhaps this is because prospective buyers are discouraged by the lack of inventory or the asking price. Either way, it suggests that buyers are curious, but not committed at this point.”
Meyer also offered a seasonally-adjusted look to get reid of the noise.
Some of you have probably noticed the lack of a spike during the housing boom of the early 2000s.
“Perhaps this is because the market was not as tight during this period,” suggested Meyer. “Housing construction was booming and there was a robust flow of existing inventory to the market, which means prospective buyers did not have to search as hard to find properties for sale. It could also be because we did not have as much information about homes for sale online.”
Regardless, most people will agree that housing has indeed hit a bump in the road.
“One cautionary note, though, is that readings on housing activity — a sector that has been recovering since 2011 — have remained disappointing so far this year and will bear watching ,” said Fed Chair Janet Yellen in her testimony to Congress this week. “The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.