Prices paid to real estate agents may predict home price trends

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A producer price index that tracks prices paid to real estate agents and brokers is a good predictor of how home prices are performing, says Jonathan Basile, director of economics at Credit Suisse. A producer price index is a measure of changes in prices received for an industry’s net output

The Bureau of Labor Statistic’s latest producer price index for “real estate brokerage, residential property sales and leases” (page 76) is up 8.2 percent for the 12 months ending in July, down from a 9.1 percent gain registered in the year ending in June. The latest S&P Case-Shiller price indices only provide insight through May.

While home price appreciation may be slowing, that’s not necessarily a bad thing, Basile says, since rising prices could make affordability an issue for more buyers. Source: wsj.com.