Housing enters a bubble by one measure

|By:, SA News Editor

On it's own the NAR's Housing Affordability Index is pretty useless - it hasn't dropped below the 100 level signaling unaffordability since Bill Clinton was president. But researchers from Robert Morris University suggest the index can detect a housing bubble if it slips below its long-term trend line for at least three months.

And that's just what it's done of late, falling below the long-term trend in April and staying there through July (July figures were reported yesterday). This doesn't mean prices are set to crash - by RMU's read, housing went into a bubble in 2004, but prices didn't peak until two years later - but the data might be another push to a Fed considering tighter monetary policy.

Homebuilders ETFs: XHB, ITB, PKB, REZ.