Existing Home Sales

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Definition:
Measures the monthly sales of previously-owned single-family houses.


Contents

Importance

Almost eight out every 10 houses are existing homes, while the rest are newly constructed. Sales of existing homes can provide economic stimulus. Some sellers will use the profits from the sale of their existing house and buy a bigger house which usually means more spending on furniture and appliances. Other sellers will choose to simply spend their profits on discretionary items. An uptrend in existing home sales also means more commissions to real estate agents and higher revenue for mortgage lenders and moving companies.

Exising home sales is used as an indicator of consumer spending and can influence interest rates. Generally, a strong growth of existing home sales is dollar bullish. A decline of existing home sales over several months is dollar bearish since this would cause interest rates to fall which weakens demand for the dollar.

Background

The Existing Home Sales Report is issued at around 10am on or around the 25th of each month by The National Association of Realtors and reflects the data gathered pertaining to the previous month's figures.

The report itself contains statistical data relating to the housing market and serves to provide an accurate measure of the level of sales of existing home sales. The Existing home Sales report is generally considered to be a fairly decent indicator of activity occurring within the housing sector.

Sales of homes are, naturally, highly dependent on the current level of mortgage rates, although there is a tendency to react with a few months delay to actual changes in rates. Sales are also shown to be determined by the levels of as yet unexpressed demand for housing, such as that which occurs immediately following a recession, where house sales typically tend to be quite strong due to actual activation of the demand which accumulated, but not been acted upon during the course of the recession itself.

As such the report is a good tool for using in gaining a snapshot of the economic welfare of the market, although there is also a trend for the survey to show see large month to month changes, such as in Summer or Winter when unavoidable circumstances such as bad weather can cause significant disruption to the normal sales patterns. All in all though, the year on year change in the median price can provide a good indication of inflation prices.

Source

National Association of Realtors

Availability

On the 25th of the month at 10:00 am EST. Data for prior month.

Frequency

Monthly


Links

Existing Home Sales

Housing Affordability Index

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