Trying to find the supply and demand of housing

Estimating the supply or demand of housing is a difficult task. The most logical step with supply is to look at new housing starts, though this has some obvious flaws since there may be trends relating to more or less houses being demolished, housing starts not finishing, and expansion or contraction in the apartment market. That aside looking at housing starts is probably the best rough estimate of how housing supply is changing.

Housing demand is even more difficult. Realtor data over the last 10 years has been getting skewed by the boom of no realtor required internet listing sites (such as housejockey.com). Aside from that, NAR is not really releasing a clear metric that could lead us to housing demand. Looking at census demographics is also futile. Illegal immigration distorts population count, and even if we could get a good population count there are no reliable ways to translate that into housing demand(it would have to be some complex equation based on employment/interest rates/etc). All of this is why I think the best estimate of demand is the same metric I posted about last week - the National Association of Homebuilders outlook survey.

So while these 2 metrics are both very simple, I think they represent the best estimate of housing supply and demand. Luckily both metrics go back quite a few years as well.