Economists' Outlook

Housing stats and analysis from NAR's research experts.

Raw Count of Home Sales During the Pandemic

According to the latest release, existing-home sales rose 21% in September from one year earlier while new home sales rose 32%.

These headline figures are seasonally adjusted and are reported in the news. To assess the overall trending direction of the economy, nearly all economic data – from GDP and employment to consumer price inflation and industrial production - are seasonally adjusted to account for regular events we can anticipate that have an effect on data around the same time each year.  Seasonality also plays an important role in the housing market since it has an impact on housing demand and supply. For instance, every year, transactions and prices tend to be above-trend in the summer while activity typically slows down in the winter.

However, for everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been.  Especially, if someone wants to understand the impact of the pandemic on home sales, it would be better to take a look at the non-seasonally adjusted estimates since this is a once in a lifetime event. Thus, depending on the type of information that one is looking for, both seasonal and non-seasonal adjusted figures can describe the current conditions in the housing market.

Specifically, 560,000 existing-homes were sold in September while new home sales totaled 75,000.  These raw counts represent a 24% increase for existing-home sales from a year earlier while new home sales rose 34%. Although both existing and new home sales dropped in the first months of the pandemic, activity ramped up to higher levels than those of a year earlier. 1,717,000 existing homes were sold in the last three months (June-September 2020) compared to 1,522,000 during the same period in 2019. While home sales activity typically slows down in the fall and winter months, that hasn’t been the case for 2020. Strong summer housing market momentum continues in the fall since activity in September was similar to summer levels. In September, 450,000 existing homes are usually sold compared to 560,000 this year. Respectively, new home sales are also running well ahead of last year’s activity. While 54,000 new homes are typically sold in September, 75,000 buyers purchased a new home this year.

What should be expected for home sales in the upcoming months in terms of raw counts?  Independent of headline seasonally adjusted figures, expect busier activity in the next two months than the past year due to the ultra-low mortgage rates. For example, in the past 3 years, October sales typically rose by 3% from September while November sales dropped 10% from October. For the new home sales market, the raw sales activity tends to decrease in October. For instance, in the past 3 years, October sales dropped by 3% from September while sales in November rose 2% in both 2017 and 2018 and it decreased by 9% from October in 2019. This year REALTORS® can expect strong housing market activity in the fall and winter months.