Existing Home Sales – Down Or Up?

By rerockstar • February 28th, 2010

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What’s in a number?

Every month, the National Association of Realtors® releases their existing home sales numbers. It’s a vast amount of data collection and is generally considered to be an indicator of where housing sales are heading, especially in rough economic times, where we seem to be holding onto any glimmer of good news.

Like most statistics, the numbers can reflect the good news or bad news, depending on how you view them and how one presents the statistic. The most recent numbers for existing home sales were released this past week (reflecting January’s sales) and already I’ve seen the good news/bad news scenario played out.

In the case of January’s statistics, the number of existing home sales were down 7.2% compared with December. However, January’s sales were up 11.5% above January 2009. Depending on how you report the news, this can sound great or this can sound terrible.

Two sides to every story.

Let’s take a look at how either number can be spun to get a different message to home buyers and sellers.

Existing home sales down 7.2% from December – Obviously the word “down” itself indicates a negative in the housing market. We’re not selling homes at the same rate as the previous month. That’s never a good sign. The housing market is slowing down. We can talk about how this is an indication of consumer confidence, the current unemployment rate, less buyers looking to buy, or any other negative indicator. By focusing on the short term month-over-month data, we can experience an emotional rollercoaster ride as we watch homes sales go up and go down.

Existing home sales up 11.5% from January 2009 – Looking at the numbers in comparison to last year’s data gives us the ability to show how things are looking up. We can turn this into an indication of a housing recovery, pulling out recession, the First Time Home Buyer Tax Credit is working, or any other positive indicator. Looking at the long term year-to-year comparisons we can focus on the overall picture of change and not just a monthly fluctuation.

I have seen two different reports this weekend, each focusing on only one of the numbers. One report made it sound like we were doomed, the other as if all the housing problems are far behind us. Both from news sources I would count as credible and trustworthy. In my opinion, neither of them painted a very accurate picture of existing homes sales and the overall housing market. Instead they focused on one part of the statistics to drive home the point they wanted to make.

At the end of the day, should existing home sales matter to you? Personally, I wouldn’t use them to decide where my housing future was going. Why? The only thing that should matter in buying or selling a home is your personal needs and wants. Much like the oft repeated “It’s a great time to buy” mantra that the National Association of Realtors® loves, buyers and sellers should look to the markets for a better understanding of what’s happening around them, but the decision to buy or sell needs to be made on a personal basis – it’s only a great time to buy or sell when it’s a great time for you.

As an interesting note: both reports I watched spoke about the Northeast. One stated that’s where the biggest decline in existing home sales occurred (home sales usually slow in the winter months there plus they’ve been beat hard with some heavy snowstorms) and the other said it was where the biggest increase occurred (comparing January 2009 to January 2010). Same are of the country, two different tales.

photo courtesy of TheTruthAbout…