Chicago Mercantile Exchange (CME), along with noted economist Robert Shiller’s MacroMarkets, Fiserv and Standard & Poor’s, have created a market exchange for futures and options contracts on home prices in ten cities in the United States. The data feed from the index is provided to Matrix from Tradition Financial Services (TFS), a broker that executes housing futures and options. Here’s a great article on how it works.

Its been a few months since I covered the index because of the light activity.

Miami continues to lead all markets, followed by LA(still, why LA?), New York and San Francisco. Chicago showed the lease activity with Denver close behind.. To date, 1,520 contracts have been purchased with an open interest value of $90,273,665.

Pricing for the 10-city index shows a 7% price drop through August 2007 which is a decline over the 4.82% decrease seen in that indicator 2 months ago. The price declines ranges from -5.7% (in Chicago) to -8.6% (in Miami). All 10 cities showed declines in this week’s figures.

TFS has started to included OFHEO swaps. It makes sense that OFHEO would be used since its such a widely read indicator and the official market position of the US government. More stuff to gamble on, I suppose.

See archived posts in Matrix that cover the CME Housing Index

Delayed Futures & Options Quotes (up to 10 min)

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3 Responses to “[CME Housing Index] Miami Cold, Chicago Hot (Less Cold)”

  1. John K says:

    Had a chance to hear Dr. Shiller talk, yesterday, at the Inman News conference down here, in Miami.

    People from his company were down here, as well, shilling (pun intended) their product.

    I like the idea, but unless they get more activity, it’s kind of useless.

    Boston has so few outstanding contracts. I don’t think you can use the futures market as indicative of where the market will go. Yes, I think it’s accurately portraying what WILL happen, but that’s just a coincidence.

  2. Jonathan J. Miller says:

    Agreed – it needs more volume to be reliable. Also, I would guess that the investors are more likely to have risky positions they are shoring up. I like to consider the volume traded in each market as a better indicator than pricing right now.

  3. LHT says:

    True on volume being an indicator of interest on speculative real estate. Most positions entered in the futures market are just a partial way to cover bets done on the market right now..Unfortunately it is a one way market and i wouldn’t enter it right now because spreads are too wide and don’t reflect actual prices..It s like selling your real estate to hedge fund vultures that are trying to pay .75cts on a 1$ in the real estate market..taking advantage of the situation..