Housing is the weak link in an otherwise upbeat trend for the US economy. Deciding if this is a temporary soft patch for real estate or the start of something darker is still a work in progress. The potential for trouble is certainly lurking, as the recent run of weak data in residential sales and construction show. Given the influential link between housing and economic activity generally, watching this sector closely is critical these days. The truth will out eventually, but a clearer picture based on the hard data for several key metrics will take months. It doesn’t help that several reports are published with a significant lag. For example, we won’t see numbers on April’s housing starts until May 16. Fortunately, there are more timely numbers to watch to supplement the analysis—numbers that may drop relatively early clues on where housing’s headed. For example, here are three data sets that deserve close attention for tracking conditions in the housing market on a real-time or quasi-real-time basis.

SPDR S&P Homebuilders Index ETF (XHB)
The trend here is bearish at the moment, with XHB falling below its 50- and 200-day moving averages in the recent past. The optimistic view is that stocks in this corner are suffering a temporary but healthy correction after a bull run that peaked earlier this year. But expecting a resumption of the party will fall on hard times if negative price momentum accelerates. An especially worrisome signal would be if XHB’s 50-day moving average slips under its 200-day counterpart. Such a turning point for the worse is still a ways off, but the margin for comfort could fade quickly if the bears mount a new raid on these stocks in the days ahead.

Mortgage Rates
One of the headwinds for housing lately has been the rise in the cost of financing new purchases. Although mortgage rates are still low by historical standards, the jump in rates from a year ago is substantial in relative terms. The national average for a 30-year conventional mortgage is in the low-4% range these days, up from around 3.3% at this time last year. For the moment, rates are stable. A sharp rise, however, would raise new concerns for the housing market. That’s a low-probability scenario for now. In any case, you can check in on the weekly updates at the St. Louis Fed’s FRED database.

Mortgage Applications
The weekly updates on the demand for new mortgages offers another perspective on the health of the housing market. In last week’s release, new applications increased 5.3% vs. the previous week, according to the Mortgage Bankers Association. The update also marked a significant change: applications for purchases outnumbered applications to refinance for the first time in five years. “It is official: we are in a majority purchase market for the first time since 2009,” said Mike Fratantoni, MBA’s Chief Economist. “A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday’s employment report from the BLS. Despite the strong increase in the purchase market last week, volume continues to run 16 percent behind last year’s pace.”