Why U.S. Home Sales Are Both Up and Down

We can’t blame you for being confused about housing. Tuesday, the market cheered a surge in existing-home sales. Then comes today’s news that new-home sales slid 11.3% in November, falling to the lowest level since April.

Up, down. Up, down. What gives?

Though the two reports both concern home sales in November, they aren’t really in synch and so aren’t comparable. The National Association of Realtors records existing-home sale data when the home closes, while the government records new-home deals when contracts are inked.

For home resales, there is typically a lag of a month to six weeks between the signing of contracts and the closing. So most of the November sales reported by the Realtors are based on decisions buyers made in September or October. At that point, lots of people were scrambling to buy homes in time to qualify for a tax credit that was due to expire Nov. 30. (It was later extended through April 2010.)

For the new-home sales, the decisions were made in November, when there was no such scramble to qualify for the tax credit.

Existing inventory includes foreclosures, which continue hitting the market and typically command a steep discount to new homes. Buyers, particularly first-timers, are rushing to take advantage of these falling prices. As Wednesday’s Journal points out, first-time buyers made up 51% of purchases in November, according to the Realtors. Sales of foreclosed and other “distressed” properties - which includes homes built during the housing boom - accounted for one-third of the purchases.

Median prices are another issue: The price tag for existing homes came in at $172,600, while new homes registered $217,400.

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