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Don’t Believe Everything That You Read…

Don’t Believe Everything You Read… Take a minute to find out how these horrific headlines are making their statistics. A QUICK article, worth a minute of your time to read.

Many headlines in the media right now are proclaiming the total collapse of the housing market. What makes it seem very believable is the headlines are based on two reports from the National Association of Realtors (NAR): the Existing Home Sales Report and the Pending Home Sales Report. However, all is not what it seems.

Both reports look at two different sets of data:

  • A year-over-year comparison of transactions (Y-O-Y)
  • A month-over-month comparison of transactions (M-O-M)

The negative headlines you have been reading are based on the Y-O-Y statistics. They are horrific. There is a logical explanation for this however. Last year, at this time, we were headed toward the expiration of the Homebuyer Tax Credit, one of the greatest buyer tax incentives in American history. There were people rushing to get their home into contract and/or to a closing. This dragged demand forward. People who would have normally closed later in the year moved their closing up in order to take advantage of the tax credit. Comparing sales in the first four months of this year to the same time last year wouldn’t be comparing similar situations. That wouldn’t make sense.

A better way to judge the market at this time is to compare month-over-month sales. Here is a graph showing the increase in pending sales over the last twelve months.

As we can see, sales dropped dramatically after the expiration of the tax credit in April 2010. Then sales began to slowly rebuild and are now increasing nicely.

Bottom Line

The market is gaining momentum not losing ground. Headlines sell papers. Actually knowing what is truly happening in the real estate market is what’s important.

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Tagged as: Home Sales

The KCM Crew

About The Author

by, The KCM Crew
We at The KCM Crew are pursuing our mission of building a home for real estate information. We are truly dedicated to helping real estate professionals by supplying all the tools and resources they need to be seen as industry leaders in their marketplace. See how we can help you to become an industry leader in your marketplace, and be sure to check out our page on Facebook and follow us on Twitter.

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