Each month we are treated to multiple reports on homes sales. Unless you happen to be a housing economist (ahem), the latest roundup of reports, covering June, might have left you seriously confused. Existing-home sales are up! New-home sales are down! Pending home sales are down—but also up! Got whiplash?
OK, it’s time to cut through the clutter and the hype. Let’s dive into the three biggest recent reports to see what they’re really telling us—and which ones really offer the insights you need to know about what’s happening in the housing market right now.
First we have the existing-home sales market, and two different metrics were used to gauge how the market looked nationally in June.
Last week, we learned about June’s existing-home sales from the National Association of Realtors®—they surpassed the peak of the 2006 housing boom. Great news, right? Housing metric lesson No. 1: Existing-home sales are really closings. The data in that report cover consummated sales of existing homes. And in that report we get readings of the volume of sales, inventory, median existing-home price trends, and useful insights into key attributes such as the share of first-time buyers.
Bottom line: We learned from the June report that this is the biggest and healthiest year for existing-home sales since 2006. Median prices set a new, though nominal, record and supply remained tight, but inventory increased for the fourth straight month to enable the higher volume of sales.
Then there’s the new-home sales report from the Commerce Department. This is the one that seems like a major bummer, as sales dipped from the previous month. Does that mean housing storm clouds are on the horizon? Not necessarily. Ironically, the Commerce Department is a part of the Census Bureau, but it bases stats on new-home sales from a small sample of builders—not a census! As a result, this data series needs to be taken with a bucket of saltwater, as the confidence interval, or margin of error, very often means that the monthly reading is statistically meaningless.
Please click here for the entire article over at REALTOR.COM.