What Are Existing Home Sales?
Existing home sales transaction data measure and report sales and prices of existing single-family homes, condos, and co-ops for the United States, and is broken down by region—West, Midwest, South, and Northeast.
This metric can be contrasted with new home sales and housing starts, which both track newly built homes rather than existing housing stock.
- Existing home sales track regional transaction data in the existing U.S. stock of single-family dwellings, condos, and co-ops.
- The reporting of most existing home sales data occurs after the transaction has closed.
- The monthly data report is released by the National Association of Realtors (NAR) and is a lagging indicator, as it tends to react after a change in mortgage rates.
New Construction vs. Existing Homes
Understanding Existing Home Sales
The existing home sales report is released monthly by the National Association of Realtors (NAR) based on closed residential real estate transactions. It is a lagging indicator since people often make housing choices in response to a change in interest rates.
According to the National Association of Realtors (NAR), the reporting of most existing home sales transactions happens after the closing, and so does not consider pending sales still in contract. The majority of transactions usually involve a mortgage, which may take 30 to 60 days to close on. As a result, existing home sale data most likely includes contracts that were signed at least a month or two before the report is published.
Existing vs. New Home Sales
The U.S. Census Bureau collects and disseminates new home sales data. The bureau defines a new home sale as the signing of a home sales contract, or the acceptance of a deposit. Also, this information comes from new construction permits on the state-level. The house may be at any stage of the construction process.
This process includes those structures not yet started, those under construction, and completed structures. About 25% of the houses sell at the time of completion. The remaining 75% splits equally between those not yet started, and those under construction.
New sales and existing home sales data releases usually occur at around the same time each month. Given the difference in definition, new home sales lead existing home sales with regard to changes in the residential sales market by a month or two. For example, an existing home sale in January was probably signed 30 to 45 days earlier in November or December of the previous year. This lapse is due to the usual time it takes to finalize sale documentation and close a mortgage.
Sources of Home Data
Many different reports analyze the housing market in the United States. These various indicators look at several different aspects of the housing market and give insight into buyer activity and regional trends:
- The NAR created a new monthly series in 2005 to overcome the lagging effect of existing home sales, called the Pending Home Sales Index (PHSI). Like new home sale data, the PHSI can be viewed as a precursor of burgeoning housing demand. The release of this report is during the first week of each month and it measures housing contract activity. The basis of the index is on signed real estate contracts for existing single-family homes, condominiums, and co-ops properties.
- The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on an average home at the national and regional levels based on the most recent monthly price and income data.
- The REALTORS® Affordability Distribution Curve and Score measures housing affordability at different income percentiles for all active inventory on the market. For each state, the curve shows how many houses are affordable to households ranked by income. The score represents affordability for all different income percentiles within a single measure.
- Metropolitan Median Home Prices and Affordability publishes statistics each quarter. Separate price reports reflect the sales prices of existing single-family homes, condominiums, and cooperative homes by metropolitan statistical area (MSA). A quarterly qualifying income report shows the income needed to qualify to purchase the median-priced existing single-family home in each metro area given a variety of down payment assumptions.
- The County Median Home Prices and Monthly Mortgage Payment indicates median home values for 3,119 counties and county-equivalents in the United States. Its calculation comes from comparing the House Price Index growth from Federal Housing Financing Agency (FHFA) to the latest housing data from the American Community Survey. Home values represent the value of all homes instead of home sales.
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