The US Gross Domestic Product is a national stat that I like to keep an eye on when considering trends of the Manhattan real estate market. It's purely a macro indicator of the economic health of the economy and yes, it's a national stat so be wary. Quarterly GDP stats are annualized and reflect economic output.
Rising output infers more future employment and/or increased wages, but higher risk of inflation and rising mortgage rates. Consumer spending comprises two-thirds of GDP and seems to provide some sense of where the overall economy is heading, including where mortgage rates are trending, both of which have some impact on real estate trends.
I matched up GDP with the median sales price change from the prior year quarter in Manhattan adjusted for inflation. I selected median sales price because it tends to eliminate the price outliers and it's the de facto national housing price indicator. However, as with average sales price, median sales price can be swayed by changes in the mix of the property types that are sold, only less so.
GDP does seem to correlate fairly closely with median sales price, coincidence or not. GDP has been falling since early 2004, before the housing market began to cool, first in the number of sales, then with price appreciation.
· U.S. GDP v. CPI-Adjusted Manhattan Median [Miller Samuel]