Friday, July 24, 2009

Have Existing Home Sales Started to Rise?

NAR reported that Existing Home Sales rose 3.6 percent in June. In response to this, MSNBC notes:

"The turnaround in the housing market appears finally to be here and indeed may be gaining some speed," wrote Joel Naroff, president of Naroff Economic Advisors Inc.

Stocks jumped on the news, with the Dow Jones industrial average rising above 9,000 for the first time since early January.

The NAR numbers suggest that sales have stopped falling, and this is doubtless a good thing. But the numbers really don't support the idea that sales are rising--yet.

The reason is that the NAR Existing Home Sales number is a seasonally adjusted annualized number. This is a correct method for reporting (or at least I have reasons to think it is correct, as I am partly responsible for the development of the Existing Home Sales Methodology). But a seasonal adjustment is a statistical measure, and as such cannot be known with precision. June is a month that requires lots of adjustment, because June sales are always higher than sales in the average month. I am guessing that 3.6 percent is inside the 95 percent confidence interval of seasonally adjusted sales, so the best interpretation of the NAR release is that sales were flat or better in June.

The really good news in the report is the fact that the share of sales that are non-distressed sales is rising.


Anonymous said...

Prices have come down, so sales volume is picking up. This is the normal supply/demand curve for virtually all products (including housing). If prices went a lot lower, sales would actually increase a lot, instead of just stabilizing. New home builders should be allowed to build European sized homes, as they would be half the size, and thus much cheaper. Sales would go up a lot, and furniture makers would experience increased sales as well.

The super low interest rates will not last when general CPI inflation starts to pick up in response to too much electronic printing. Homes must be affordable without creative finance, or artificially manipulated rates. Affordable prices is the only way for the housing industry to be self sustaining.

reading said...

yes, it works according to the economists that will extract the price value of property . .when it goes down no matter this would also be down . .because the real estate market always move on its the power value that keeps its state stable . .
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reading said...

WOW This is such a nice article about home sales started to rise......

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Milagros Wattles said...

What the latest Kelowna Real Estate numbers will likely mean is an improvement in the national average sale price, which was up 20% in October from a year ago — the largest such increase in two decades. The two cities tend to skew the national average price up or down, based on levels of sales activity.

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