June’s Existing Home Sales reported weaker than expected and dropped from prior levels, according to the National Association of REALTORS.
Because our country (A) loves to discuss real estate, and (B) loves statistical headlines, expect tomorrow’s newspapers to emblazon one (or both) of these data points on the front page:
- Home sales are down 3.8% from May 2007
- Home sales plummet 11.4% from one year ago
Those are two of the negative points from the NAR report.
There were positives in the report as well, but they’ll likely get buried deep in the newspaper coverage.
For example, homes are more affordable today than they were a year ago. Mortgage rates for “A” paper home buyers (i.e. strong income, assets and/or credit rating) are slightly lower today in June 2006.
Additionally. the number of homes on the market dropped in June which led to, in part, an increase in the median home sale price.
We bring the up today because it’s important to remember that real estate is not a national news story — it’s hyper-local. That’s why newspaper headlines need to be taken with a grain of salt.
Your home is a part of your neighborhood and that has its own “real estate market”. Just like on any street in America, your street has good buys and outright lemons listed for sale. What’s happening on the national scene has absolutely nothing to do with what’s happening in your backyard.
Unfortunately, this is a truth that remains largely untold.
Prospective pool of buyers can be frightened by negative headlines like the ones we’ll likely see tomorrow morning. Fewer buyers means less demand for homes, placing additional downward pressure on the housing market.