Understanding Existing Home Sales: Definition, Reporting Process, and Implications
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Summary:
Existing home sales represent crucial transaction data tracking the sales and prices of existing single-family homes, condos, and co-ops in the United States. This article offers an in-depth understanding of existing home sales, including their significance, reporting process, and comparison with new home sales. It also explores various sources of home data and resources for addressing mortgage lending discrimination.
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Understanding existing home sales
Existing home sales data provide insights into the dynamics of the residential real estate market in the United States, focusing on the sale and pricing trends of existing single-family homes, condos, and cooperative properties. Released monthly by the National Association of Realtors (NAR), this data acts as a lagging indicator, reflecting changes in housing market conditions after they occur.
Reporting process
The reporting of existing home sales typically occurs after the closure of real estate transactions. As such, it does not include pending sales still under contract. Most transactions involve mortgage financing, which can prolong the closing process, resulting in a delay between the signing of contracts and the publication of sales data.
Existing vs. new home sales
It’s important to distinguish existing home sales from new home sales, which are tracked separately by the U.S. Census Bureau. New home sales refer to the signing of contracts or acceptance of deposits for newly constructed homes, regardless of their construction stage. While both data sets offer insights into the housing market, new home sales tend to lead existing home sales by a month or two due to differences in reporting processes.
Sources of home data
Several reports and indices analyze various aspects of the housing market in the United States, aiding in understanding buyer behavior and regional trends:
The pending home sales index (PHSI)
Introduced by the NAR in 2005, the PHSI serves as a leading indicator of housing market activity by measuring contract signings for existing homes, condos, and co-ops. Its release, typically in the first week of each month, provides valuable insights into future existing home sales trends.
The housing affordability index
This index assesses whether the average household income is sufficient to qualify for a mortgage loan on an average-priced home at national and regional levels. It considers both housing prices and income levels to gauge affordability for potential homebuyers.
The realtors affordability distribution curve and score
Provided by the NAR, this metric offers a comprehensive view of housing affordability across different income percentiles. It highlights the number of homes affordable to households at various income levels within each state, aiding policymakers and industry professionals in understanding affordability challenges.
Metropolitan and county median home prices
These reports, published quarterly, offer insights into median home prices and affordability at both metropolitan and county levels. They provide valuable data for real estate professionals and prospective homebuyers, allowing them to make informed decisions based on local market conditions.
Addressing mortgage lending discrimination
Mortgage lending discrimination is prohibited under federal law, yet instances may still occur. Individuals who believe they have experienced discrimination based on factors such as race, religion, sex, marital status, or national origin can file complaints with regulatory authorities such as the Consumer Financial Protection Bureau or the U.S. Department of Housing and Urban Development (HUD).
Frequently asked questions
What is the significance of existing home sales data?
Existing home sales data provide crucial insights into the health of the residential real estate market, including sales volume, pricing trends, and regional variations. This information is valuable for industry professionals, policymakers, and prospective homebuyers in understanding market conditions and making informed decisions.
How does existing home sales data differ from new home sales data?
Existing home sales data track transactions involving pre-owned homes, condos, and co-ops, while new home sales data focus on sales of newly constructed homes. Additionally, existing home sales data are typically reported after transactions have closed, making them lagging indicators, whereas new home sales data may lead existing home sales data by a month or two.
What are some potential implications of mortgage lending discrimination?
Mortgage lending discrimination can have serious consequences, including limiting access to homeownership opportunities for certain demographic groups, perpetuating socioeconomic disparities, and undermining fair and equal access to housing finance. It is essential to address and combat discrimination in mortgage lending to promote housing equity and affordability for all.
Key takeaways
- Existing home sales data offer insights into sales and pricing trends of existing single-family homes, condos, and co-ops.
- Reporting of existing home sales occurs after transactions have closed, making it a lagging indicator.
- New home sales data, tracked separately, typically lead existing home sales by a month or two.
- Various reports and indices, including the PHSI and Housing Affordability Index, provide valuable information for industry professionals and policymakers.
- Mortgage lending discrimination is illegal and can be reported to regulatory authorities.
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