Link to the Existing Home Sales Report:
Existing-Home Sales
Link to the Pending Home Sales Index:
Pending Home Sales Index
Text From Video:
The Existing Home Sales report, and the Pending Home Sales Index.
The Existing Home Sales report and the Pending Home Sales Index are 2 separate reports by the National Association of Realtors that monitor the sales of homes in the US. I’ll post links for both reports in the text next to the video.
The Existing Home Sales report monitors the monthly sales of existing, or previously owned homes.
The report is issued monthly by the National Association of Realtors on or near the 25th of each month.
Home sales show the level of demand in the country. When the economy is doing well, more people buy homes. When the economy is doing poorly, less people buy homes. Also, when home sales increase, consumers tend to spend more on durable goods such as furnature and appliances.
A large part of the driving force for home sales is interest rates. Home prices begin to rise when demand goes up in the country Interest rates are raised to lower demand. Eventually interest rates and home prices will rise to a point that home sales will begin to decline.
Home prices begin to decline when demand is down in the country. Interest rates are lowered to increase demand. Eventually interest rates and home prices become low enough that home buying begins to increase again.
Because of this relationship, changes in home buying trends are a good indicator for turning points in the economy.
Looking at the report itself-
The report contains two tables, as well as a summary with opinions as to the causes for changes in sales.
Because home sales are greatly effected by things like changes in weather, the report provides the statistics both seaonally adjusted and not seasonally adjusted.
The first table contains the quantity of sales of existing homes, plus the inventory of availble homes for sale.
The second table contains the average prices the homes sold for.
The table for Existing Home Sales shows the number of homes sold per month for the entire US. Next to that is the number of homes sold in just the Northeast, the Midwest, the South, and the West.
On the bottom of the page is the percent of change in sales from the previous month and percent of change from the previous year.
On the right side of table are number of homes for sale, also known as the inventory level.
Next to that is the number of months supply. This is the length of time it will take to sell all the homes presently for sale. Another way to look at this is that it is the average time it takes to sell a home that has just been placed on the market.
Just like in the other sections, at the bottom of the column is rate of change in inventory and supply from the previous month and from the previous year, with both statistics being presented as a percent of change.
Inventory levels show the level of supply in the country. When inventory levels increase, home prices drop. When inventory decline, home prices rise.
The most important statistics reported in the media are the seasonally adjusted number of homes sold, the inventory level, and the monthly percent of change for both.
The second table shows the Sales Price of Existing Homes.
The Sales Prices for Existing Homes table shows both the average price and median price for all homes sold in the US, as well as homes sold in just the Northeast, the Midwest, the South, and the West.
Economists compare the change in home prices to inflation rates to see if homes are an attractive investment.
The existing home sales report only counts homes after the sale is closed. This makes the report severely lag as an economic indicator. Because of this, the NAR created another report known as the Pending Home Sales Index which counts the number of sales contracts signed and placed into escrow. When a contract is signed, and a home is placed in escrow, it is typically about 1-3 months before the sale closes and the home is paid for.
In addition, while not all contracts signed make it to closing, the ratio of home contracts signed to those that actually close is fairly consistent.
Remember that home sales generate a lot of income for other sectors, such as durable goods, making this report an excellent leading indicator for possible changes in future revenue for those sectors.
The Pending Home Sales Index comes out the first week of the month.
The report contains a very short summary and a single table. The table shows the number of homes under contract displayed as an index number.
An index number of 100 is equal to the average number of contracts signed in 2001, which is the year the report was created.
Shown is the number of contracts signed in the entire US, as well as the number on contracts signed in just the Northeast, the Midwest, the South, and the West.
At the bottom of the chart is the percent of change from the previous month, and the percent of change from the previous year.
So that’s Existing Home Sales report, and the Pending Home Sales Index; two reports that monitor the sales of homes in the US. In the next video, we will cover a third report that covers New Homes Sales. See you then.
Music:
Existing Home Sales:
Danse Macabre – Low Strings Finale (Theme)
Exotic Battle
Machinations
Monkoto
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