Economists' Outlook

Housing stats and analysis from NAR's research experts.

Raw Count of Home Sales (March 2015)

  • Existing home sales rose 6.1 percent in March from one month prior while new home sales fell 11.4 percent.  These headline figures are seasonally adjusted figures and are reported in the news.  However, for everyday practitioners, simple raw counts of home sales are often more meaningful compared to the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been.
  • Specifically, 403,000 existing homes were sold in March while new home sales totaled 45,000.  These raw counts represent a 37 percent gain for existing home sales from one month prior while new home sales were unchanged.  What was the trend in the recent years?  Sales from February to March rose by 25 percent on average in the prior three years for existing homes and by 12 percent on average for new homes.  So this year, existing homes outperformed compared to its recent norm while new home sale underperformed.  Note that the size of the existing home sales market is about 10 times larger than the new home sales market.
  • Why are seasonally adjusted figures 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.  For example, if December raw retail sales rise by, say, 20 percent, we should not celebrate this higher figure if it is generally the case that December retail sales rise by 35 percent because of the holiday gift buying activity.  Similarly, we should not say that the labor market is crashing when the raw count on employment declines in September just as the summer vacation season ends.  That is why economic figures are seasonally adjusted with special algorithms to account for the normal seasonal swings in figures and whether there were more business days (Monday to Friday) during the month.  When seasonally adjusted data shows an increase, then this is implying a truly strengthening condition.
  • What to expect about home sales in the upcoming months in terms of raw counts?  Independent of headline seasonally adjusted figures, expect busier activity in April and even better activity in May for existing home sales.  For example, in the past 3 years, April sales rose by 11 to 18 percent from March and with more gains in May where sales rose by 11 to 12 percent from April.  For the new home sales market, the raw sales activity in April and May tends to be only modestly better compared to those occurring in March.  All in all it’s no time to be thinking of vacation during these months of the year for REALTORS®.

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