Existing Home Sales report on the number of completed real estate sales transactions on single-family homes, townhomes, condominiums and co-ops.
Each month the National Association of Realtor® receives data on existing-home sales from local associations/boards and multiple listing services (MLS) nationwide. NAR captures 30-40% of all existing-home sale transactions with its monthly survey.
The methodology in calculating existing-home sales statistics is really quite simple. The monthly EHS economic indicator is based on a representative sample of 160 Boards/MLSs. The home sales data (raw data) is divided into the four census regions: Northeast, South, Midwest and West. The raw sales volume from the participating Boards/MLSs is carefully evaluated by NAR economists to ensure accuracy. Some of the possible problems with the data could be caused by:
Once the “problematic data” have been extricated from the sample, the aggregated raw volume figures are weighted to accurately represent sales activity for each region of the country. This is also called the non-seasonally-adjusted volume. The weights are benchmarked every 10 years to reflect shifts in regional demand. The non-seasonally adjusted volume is then converted into seasonally-adjusted annualized rates.
Median and mean (average) prices are computed for the nation and four census regions on a monthly basis. Median prices are also calculated for selected metropolitan areas and are reported quarterly to give adequate time for data gathering.
Due to the nature of the distribution of home sales prices, the mean sales price is usually higher than the median price. There is a slight degree of seasonal variation in reporting selling prices. Sales prices generally experience the largest gains in the summer months, as favorable weather conditions create an ideal atmosphere for buying and selling a home. Demand for homes usually hits its seasonal peak in the third quarter, and strong price appreciation generally follows suit, and then declines moderately over the next three months. Despite the slight seasonal variances that exist in the price series, sales prices are not seasonally adjusted. The reason for this is that seasonal variances are extremely fickle and difficult to gauge. Furthermore, changes in the characteristics and size of a home have a more pronounced effect on home prices.