As most Forex traders use fundamental analysis to plan their marketing strategies, the news of a new housing index wave industry. So far, the housing index commonly used by Forex traders to predict the movement of the currency was the S & P/Case-Stiller index of real estate prices. This index follows the movements of prices in the housing market in 20 different municipal regions throughout the country. It measures changes in the average prices of resale in the designated fields indexed properties. The indices are published once a month with a two-month delay. The new index of housing (the IAS360), developed by a company based in Denver, has an account of price changes in the wider (and different) US market.
The IAS360 in details
Housing IAS360 index addresses some inherent weaknesses of the always used S & P/Case-Stiller index of real estate prices. This new index analyzes changes in the trend in housing at a deeper, broader level (360 counties, with 30 reported indices). This broader view is especially useful in times of recession, since it can give evidence of reverse movements in emerging markets. For example, using the housing IAS360 index, some markets that have not been analyzed by other indices such as the S & P/Case-Stiller index, could show real growth. This in turn could be what brings the recovery of growth in the global market, which could have been overlooked by the more limited housing index indicator.
The average selling price
The IAS360 index analyzes data based on the average selling price, while other indices analyzed the data based on average selling prices. The method of average selling prices (taking the average between the maximum and minimum prices price) paint a more realistic picture than the average sale price method, since it is not biased towards households higher or lower in price.
Regular information is crucial for identifying trends and know when investing in emerging markets. Unlike the two-month delay in reporting about the index S & P/Case-Stiller (i.e. figures may come out in the last week of July), IAS360 details with only a period of a month (i.e., figures for may are published at the beginning of July). With a timely communication, the investor can take a better informed trading decision.