Did you hear? Existing-Home Sales Jump To Highest Level in 2-1/2 Years as reported early this morning. According to the official release from the National Association of Realtors® (NAR) existing-homes sales surged a surprising 10.1% in October.
The only thing surprising about this number is the fact that many in the real estate industry had not expected or anticipated such an increase. What's even more surprising is that with the new peak in existing-home sales report that forecasts are being revised for the recovery of the housing market effective today.
Let's rewind and figure out what today's report really means and how the real estate industry got to this point.
To begin with, according to the NAR Existing-Home Sales Methodology the NAR capture 30-40% of all existing-home sale transactions with its monthly survey. Before they can become an existing sale, a contract would have had to been written which generally involves the services of a Realtor®.
This would have been measured by the Pending Home Sales Index (PHSI). The interesting thing about this index is that it attempts to predict future sales. According to NAR the PHSI only accounts for 20 percrnt of all transactions of which 80% close within 60 days while the remainder close within 4 months.
Do you remember what the headlines were a couple of months ago? Let me give you a hint. It had to do with the steady growth in the Pending Home Sales Index. This latest report will definitely create even more confusion to home sellers and buyers throughout the country.
For all the positive spin the media is broadcasting across the news wire, there are some startling facts hidden within the report. Did you also hear that the national median home price dropped 7.1% and that 30% of all sales in October were distressed sales. Try explaining that to sellers.
Existing-Home Sales Up, But Not All It's Cracked Up To Be!