There are many economic indicators that can be used to predict a housing market crash. Here are a few:

  1. Unemployment rate: The unemployment rate is closely related to the housing market. A high unemployment rate can lead to a decrease in the number of people who can afford to buy homes. The historical correlation between the unemployment rate and the housing market is strong. A rise in unemployment typically leads to a drop in home prices. Source: Bureau of Labor Statistics (BLS)
  2. Homeownership rate: The homeownership rate is the percentage of households that own their own homes. A decrease in the homeownership rate can be a sign of a housing market crash. The historical correlation between the homeownership rate and the housing market is strong. A drop in the homeownership rate is usually followed by a decline in home prices. Source: U.S. Census Bureau
  3. Building permits: Building permits are a leading indicator of the housing market. An increase in building permits is often a sign of a healthy housing market. A decline in building permits can be a sign of a housing market crash. The historical correlation between building permits and the housing market is strong. A drop in building permits usually leads to a decline in home prices. Source: U.S. Census Bureau
  4. Delinquency rate: The delinquency rate is the percentage of borrowers who are behind on their mortgage payments. A rise in the delinquency rate can be a sign of a housing market crash. The historical correlation between the delinquency rate and the housing market is strong. An increase in the delinquency rate is often followed by a decline in home prices. Source: Mortgage Bankers Association
  5. Interest rates: Interest rates are closely related to the housing market. A rise in interest rates can lead to a decrease in the number of people who can afford to buy homes. The historical correlation between interest rates and the housing market is strong. A rise in interest rates is usually followed by a decline in home prices. Source: Federal Reserve Bank of St. Louis
  6. Consumer confidence: Consumer confidence is a measure of how optimistic consumers are about the economy. A drop in consumer confidence can be a sign of a housing market crash. The historical correlation between consumer confidence and the housing market is strong. A decline in consumer confidence is often followed by a decline in home prices. Source: The Conference Board

It’s worth noting that these indicators are not foolproof, and that other factors can also contribute to a housing market crash. However, by monitoring these indicators over time, economists and policymakers can gain insights into the health of the housing market and the broader economy.

Sources:

Delinquency Rate

Building Permits

Unemployment Rate

Federal Funds Effective Rate