Existing Home Sales Drop?

by Osman Parvez

The New York Times got it wrong. It's what happens when you want to write (or are told to) about the real estate bubble bursting, but the numbers don't exactly support your thesis.

A recent NY Times piece reported a 2.7% drop in existing home sales. The author notes that homes still showed increased appreciation nationwide, "by 16.6 percent to $218,000 compared to the median -- or midpoint -- price in October 2004."

Ok, given this information, a reader might think the 2.7% drop is referring to the same period, year/year (October 2005 vs 2004). Oops. The NYT is mixing statistics. The 2.7% drop nationwide is a month/month statistic. There were actually a few months during 2004 that showed a decrease from the previous month, while the majority showed increasing month/month sales.

What really matters, as any analyst will tell you, is the numbers as compared to the same period a year earlier. If you look at it this way, there was actually a 3.7% INCREASE in the number of existing homes sold. Breaking it down by region, the Northeast saw a 0% change, the Midwest a 1.3% increase, the South a 7.0% increase, and the West a 3.8% increase.

This is why it pays to do your own homework.

All statistics are on a seasonally adjusted basis, taken from the data from NAR.

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This document contains forward-looking statements. You are strongly cautioned that investment results are subject to business, economic and other uncertainties. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time. Always consult your financial advisor before making an investment decision.