Fundamental Analysis Education

Interpreting the Housing Market

Existing Home Sales data is for sales during the previous month and is released around the 25th of each month. This monthly report is released from the National Association of Realtors. It tracks the sale of existing homes used to gauge the demand in the housing market. More specifically, it is an economic indicator of both the number and prices of existing family homes that were closed during the survey month, along with average sales prices by geographic region. The “closed” distinction is important because most closing periods are from six to eight weeks, so values listed are likely to relate to sales made about two months prior. Robust home sales usually means economic growth is excellent, and any possible recession would be coming to an end.

Besides the aggregate number of existing homes sold and the median selling prices, inventory levels are reported through the “month’s supply” figure. This figure represents the length of time in months required to eliminate the existing inventory measured during that period. Weather is a big factor in determining month-to month demand among consumers. If you are still curious about the effect of the housing market, see the movie The Big Short.