One of the best forecasters of economic conditions is the financial markets. So much money is riding on it that it reflects the best knowledge of everyone on the planet - the ultimate in crowd sourcing. It has even been proven that orange juice futures offer a better forecast of Florida weather than the national weather service. So maybe we should look to the stock market for what it's telling us about the direction of the housing market.
There is a home builder exchange traded fund - SPDR S&P Homebuilders (XHB) - that tracks the stocks of a portfolio of companies tied to the housing industry (homebuilders, appliance manufacturers, home improvement retailers, etc...). And what is this index telling us about housing? Lately it has been powering to ever new highs. As you can see in the graph below it has recently hit the highest level in 3 1/2 years.
Could this be the telltale sign of a housing market that has finally hit bottom?
To make it easy to follow this indicator I have embedded this live graph in our Chicago real estate market statistics page.