Boom Bust and Blame

Crisis A-Z


Existing Home Sales:
The National Association of Realtors releases this report this report at 10:00 EST around the 25th of the month. It provides a measure of the level of sales of existing homes and is considered a reliable indicator of activity in the housing sector. Housing starts precede this report each month, but starts are a supply rather than demand-side indicator. Existing home sales reports precede the other key demand-side indicator of housing, new home sales. Sales of existing homes are highly dependent on mortgage rates, and tend to react with a few months lag to changes in rates. Sales are also determined by the level of pent-up demand for housing; for example, immediately after a recession, sales are typically quite strong due to the demand which accumulated through the recession. When the survey sample for existing home sales is larger than that of new home sales, it makes the indicator somewhat less susceptible to large revisions. Both reports can see huge month-to-month swings in winter, when bad weather can significantly affect sales.

This report also indicates the size of the inventory of homes for sale and the median price. The inventory of homes for sale at the current sales pace is the inventory-to-sales ratio of the housing sector. The lower this figure goes, the greater the need for new housing starts. The year-to-year change in the median price provides a good indication of inflation in home prices