The National Association of Realtors released their numbers for February Existing Home Sales yesterday, but any correlation between the NAR’s analysis and the data is purely coincidental. According to Lawrence Yun, chief economist of the NAR:
WASHINGTON, March 24, 2008 – Sales of existing homes increased in February and remain within a fairly stable range, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate (1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.
Let’s just take a look at a couple of graphs to put his comments in perspective. Here’s what the monthly sales graph has looked like since January 2001:
The increase from January obviously could be explained by normal month-to-month variability- there is insufficient evidence to declare February’s sales numbers an improvement, especially in light of the year-over-year change:
Year-over-year is the more statistically significant number. Sales activity typically increases this time of year as home sales tend to be seasonal. Month-to-month increases this time of year are no more indicative of improving sales than rising spring temperatures are indicative of global warming. You must look at the YOY to determine market trends. Clearly sales continue to deteriorate.
According to Yun:
The national median existing-home price (2) for all housing types was $195,900 in February, down 8.2 percent from a year earlier when the median was $213,500. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median with relatively fewer sales in higher priced markets.
Slower sales in high cost areas do not necessarily equate with a lower median. In many instances we’ve seen where the slowdown has been greatest among first-time buyers, resulting in the median actually rising when sales have dropped. The median price drop in fact may not adequately reflect same house appreciation, as sellers are now offering incentives that they have not offered in the past. In addition, the NAR’s figures are not adjusted for inflation.
In the report, the NAR president offered this advice:
“Consumers need to be aware of local market conditions and comparable sales prices to have a clear picture of a home’s value,” he said. “Realtors® understanding of local markets, negotiating expertise, and transaction experience are invaluable to both buyers and sellers, today as much as ever.”
Here’s hoping that potential buyers make sure that their realtors have a better understanding of local markets than Yun appears to have of national one. Otherwise their expertise won’t be "invaluable", it will be "worthless".