Do not put your faith in what statistics say until you have carefully considered what they do not say. ~William W. Watt
Here are the facts: In November 2010, existing home sales sold at a seasonally-adjusted annual rate of 4.68 million units. The inventory of existing homes available for sale at the end of November was 3.71 million homes.
You may have read that existing home sales in November went down. Those articles were comparing November 2010 results from those of November 2009. What disturbed us about most of these articles was the absence of a very important fact…the initial deadline for the Federal Housing Tax Credit was set for the end of November 2009, driving sales up in that month, even though the deadline was later extended until April 2010. Without mentioning the tax credit, we found numerous articles that mentioned a nearly 28% decline in existing home sales, year-over-year. We find that the absence of full disclosure of the facts in that case are quite misleading. Without a doubt, the housing tax credit increased sales, especially at the initial deadline and the revised deadline, and yet many news articles failed to mention this in any manner whatsoever, giving the impression that November 2010 was a dismal failure.
Statistics can be made to prove anything – even the truth. ~Author Unknown
On the other hand, we found articles that compared November 2010 only to October 2010 and touted an increase in sales of existing home sales of roughly 5.6%. The impression from these articles is that November was a great month and that the economy is headed in the right direction. To be fair, many of these articles mentioned both the month-over-month gain and the year-over-year decline, but not all of them. To limit the discussion to one or the other is to mislead the reader and misrepresent the truth.
Facts are stubborn things, but statistics are more pliable. ~Author Unknown
Our advice to our readers is to always seek the bigger picture. The fact that there are fewer homes available for sale in November 2010 compared to October 2010 is actually the most important comparison that can be made for anyone considering buying or selling their homes right now.
Inventory in November dropped to a 9.5 month supply – meaning the current rate of sales compared to the existing inventory would require 9.5 months to completely sell out. In October 2010, there was a 10.5 month supply, which essentially means that the rate compared to inventory improved from October to November.
The raw number of homes sold can’t tell the whole story, especially when using months when the tax credit was still in effect. The raw number of homes available can’t tell the whole story because you need to understand the speed at which they are changing hands to fully grasp the health of the housing market. Our opinion is that November’s results show that RIGHT NOW things are improving. But we have been in this business long enough to understand that dozens, if not hundreds, of things impact real estate sales, so until we see December’s results, it’s anyone’s guess which way things are headed…and by then, we’ll already be influenced by the next set of results.
Be cautious of what you read in headlines. If you have questions, please ask them of us by emailing email@example.com or visit our website at www.missionmortgage.com where we provide answers and explanations to numerous real estate related questions.