Sometimes the serendipity of my Twitter stream provides great food for thought. This morning, I saw this seemingly contradictory pair of tweets from housing market people I follow:
So what’s really going on? Are home sales climbing or falling?
It’s often the case with real estate data (and economic data in general) that your perspective matters more than the data point itself.
Here’s how we look at it. Both of these comments are looking back at April, but we’re nearly at June. Furthermore they’re attempting to roll up an entire month, when the market is as fluid as real estate, it’s much more insightful to look at the data weekly. April is the heart of the spring home buying season, which peaks on June 30 like clockwork. Since April, we’ve continued to see demand for US real estate climb each week. We’re definitely not “losing steam.” And sorry, HousingWire, homes sales certainly didn’t “crater” – you’re being distracted by lagging-measurement noise away from the bigger picture.
Let’s take a look at the Altos Research absorption rate. This unique-to-Altos Research statistic tracks home sales before they’re reported. It is the earliest, most comprehensive proxy for home sales in the US.
You can see that the transaction rate is higher in 2015 than it has been in recent years and that we have another month before the sales rate plateaus for the summer. It looks like we’ll spend the summer at about 32,000 sales per week (single family homes across the Altos 20-City national composite) – a rate about 4% higher than the last few years.
We’re still in a supply-constrained market, of course, but this data indicates that we’re not at the limit of buyers, which jives with other data we’ve been discussing lately.