Scott Kinne First Heritage Mortgage

Scott Kinne's Mortgage information Blog

  • About Scott
  • Testimonials
  • Resources
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Affordable Credit Repair
    • Interest Rates
    • Loan Programs
    • Loan Process
    • Loan Checklist
    • Mortgage Glossary
    • Mortgage FAQ
  • Main Website
  • Contact
  • Apply

Why New Home Sales Data Doesn’t Tell Us Much About The Real Estate Market

December 4, 2007 by Scott Kinne

New Home Sales data does not account for cancellations

October’s New Homes Sales report showed a modest month-over-month improvement from September.

Before we interpret that to mean that the housing market is rebounding, though, let’s consider the fallibility of the New Home Sales report.

On the Census Bureau’s Web site, there is a disclaimer about the validity of the data. Paraphrased, it reads:

A new housing unit is considered sold when a contract is signed and/or earnest money is exchanged. There is no follow up to verify if the sale was closed, or canceled.

Therefore, if cancellations are high, the New Homes Sales data can be overestimated.

Couple that with the 35-45% cancellation rates as reported by builders and you start to get the picture.

However! The disclaimer also includes the following text (again, paraphrased):

A housing unit will never be counted twice so if a previously canceled unit is later sold again, the Census Bureau does not count this sale a second time.

Therefore, when demand is strong, New Home Sales can be underestimated.

In other words, the New Homes Sales report overestimates sales figures in a weak market, and underestimates them in a strong market.

The long-term impact of October’s New Homes Sales report is unclear. The only thing that is clear is that the monthly New Homes Sales report doesn’t tell us a whole lot.

Filed Under: Uncategorized

Scott Kinne

Contact Scott

Vice President, Senior Loan Officer
NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

Licensed In Maryland, Virginia, Washington D.C., West Virginia
  LOAN APPLICATION
  FREE RATE QUOTE

Connect with Me!

Sign Up For My Free Newsletter

Categories

Recent Posts

  • An Overview Of A Drive By Appraisal
  • What’s Ahead For Mortgage Rates This Week – July 5, 2022
  • Case-Shiller: Home Price Growth Slows in April
  • The Quick and Easy Guide to Understanding the Math Behind Your Mortgage Closing Costs
Equal Housing Lender
nmlsconsumeraccess.org
First Heritage Mortgage, LLC, Company NMLS ID #86548

Our Location

3201 Jermantown Road
Suite 800
Fairfax, VA 22030
Business: 703-293-6146
Cellphone: 571-237-6241

Copyright © 2022 · Powered by MySMARTblog