Comparing Sales of New and Existing Homes in October

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Real Estate

When comparing existing home sales and new home sales announced for the same month, remember that these figures may be representing data during different months.

Counting of New and Existing Home Sales

Monthly data on new home sales are collected and announced by the U.S. Census Bureau while existing home sales are collated and announced by the National Association of Realtors. The bureau counts new home sales at the signing of the sales contract and receipt of the deposit while the NAR counts existing home sales at the closing of the sales contract.

Given the timing of the counting of new homes sold, which is at the contract signing, the census data for new home sales therefore includes homes which are not yet started, undergoing construction, or already finished. According to the bureau, for most months, typically 75 percent of new homes sold and counted are still to be started or undergoing construction while the rest are already completed.

Existing home sales, on the other hand, which are counted at the point of closing, refer to sales contracts that may have been signed one or two months prior to closing, as mortgage paperwork typically takes 30 to 60 days to close.

With these differences, based on sales contracts, the data for new home sales leads the data for existing home sales by one month or two months. For example, an existing home sale counted for October may have been signed in August or September.

New and Existing Home Sales in October

In October, both sales of new homes and existing homes dropped, affirming the general feeling that the housing market is still struggling. Based on figures released by the bureau together with the Housing and Urban Development Department, sales of new single-family homes dropped by 8.12 percent from an annual rate of 308,000 units in September to 283,000 units in October. Sales also dropped by 28.5 percent compared to sales in October last year, which reached 396,000 units. These sales figures represent numbers that have been seasonally adjusted.

Similarly, sales of existing homes decreased in October. According to NAR, the adjusted annual rate of sales in October was 4.43 million units, down by 2.2 percent from the September annual sales of 4.53 million and down by 25.9 percent from 5.98 million in October last year.

The average sales price for new homes sold to buyers in October was $248,200, and the median price was $194,900. The seasonally adjusted price was $202,000. As expected, the median price for all types of existing homes sold in October dropped to $170,500, but the pace of decrease slowed as the rate of decrease was only 0.9 percent.