I ran across this Business Week article today on MSN. The article provides some great fodder for data analysis. In short, Toll Brothers, the nations largest manufacturer of luxury homes warned this week of softening in the housing market. The article’s author Peter McCoy poses some great questions regarding trade-offs between renting/buying and saving/spending and potential softening of home construction. Here’s a quick chart to examine the decline in visits to Toll Brothers site (proxy for interest in luxury homes) versus visits to the Hitwise Business & Finance – Building & Construction category (capturing 384 sites, a proxy for interest in home construction overall).

The contrast between Toll’s decline and the categories maintenance over the same period may indicate a divergence between luxury home construction and overall home construction.
Predicting home construction (housing starts) through our Building & Construction category has been a skunkworks project for the Hitwise Research Team. In general we’ve been able to predict directional changes in housing starts 1-2 months out (the thinking behind this is that potential home construction projects start with home owners researching construction, building plans and costs on the Internet).
Look for a follow-up post to see if we can shed some light on the issues that McCoy brought up regarding tradeoffs as well as post some thoughts overall on the direction of the U.S. housing market.