The NAR released its national pending home sales index on re-sales today covering the same period (warning: gloat) we released the RealEstate Business Intelligence‘s RBI Pending Home Sales Index for Washington, D.C. Metro and Baltimore Metro back on August 10th.
I’m not a fan of seasonal adjustments since it becomes one more variable to get comfortable with (remember the misleading tax credit trending fiasco as shown in the chart above?). The national NAR results showed a non-seasonally adjusted 13.5% drop in signed contracts from June to July. While home sales tend to drop during this period of the year, there was a larger month-over month decline than we’ve seen in the past 2 years: 7.4% in 2010 and 7.9% in 2009.
I’d attribute a lot of the additional decline to the national hyper-focus on the debt ceiling debate that reached a crescendo during the month of July.
Q: What do consumers do when faced with uncertainty?
A: They take longer to make decisions.
For comparison’s sake, Washington, D.C Metro saw a 6.1% decline and Baltimore Metro saw a 6.2% decline in total pending sales from June to July, roughly half the decline of the national rate.
Why do we differentiate between new and total pending sales in the RBI reports?
One important distinction between the RBI Pending Home Sales Index and NAR is that we rely on new pending sales rather than total pending sales. We saw a 10.9% month-over-month decline in July for DC Metro and a 6.9% decline for Baltimore for new pending sales.
We want to bring to light the most recent market patterns. New pending sales show how many contracts were signed in the most recent month while total pending sales show the amount that remain under contract, no matter how long ago the signing actually occurred.
When the market changes quickly, we believe the RBI Pending Home Sales Index we produce for both market areas will more accurately reflect their current conditions.
Please remind me again why we care about a national housing market index to better understand our local housing market?
I have no idea.