Housing is an issue for all of us – as investors, and as ordinary people in need of a roof over our heads.
As investors, there’s always lots of housing news toward the end of the month.
The NAR releases its “pending” and “existing” home sales reports, which include sales volume and prices. The Commerce Department releases its New Home Sales report.
I like to keep you updated on those reports here.
The news in late October wasn’t good. I have been warning about this for months.
Homebuilding stocks have tanked since I suggested in early October that they were ripe to be shorted. It was an opportunity for big profits.
So should we harvest those profits now?
Here’s what you need to know from the latest housing data…
Ignore Outdated and Seasonally Adjusted Home Sales Data. Pay Attention to These Numbers Instead
The NAR released its existing home sales data on October 19.
It’s essentially useless data because it tells us merely how many homes that were sold in previous months went to closing in September. Closing is a rubber stamp formality in 90-95% of sales. Furthermore, it’s old data. The September “sales” were already typically 6-8 weeks beyond the contract date. So the October 19 report covers sales made mostly in August.
The real sale is the signing of the sales contract. The NAR calls that data “pending” home sales. But it’s the only data that matters because it’s when all parties to the sale, including the realtor, buyer, seller, and other buyers in the market, consider the property sold. The SOLD sign goes up and the house is listed as SOLD in the MLS. It’s when the price is set.
So that’s what we pay attention to. The NAR reports it. They call it “pending home sales.”
The pending home sales report for contracts signed in September was released on October 25. For real estate, a one month delay is quick enough. Until it isn’t. And right now we’re getting to the threshold of one of those “until it isn’t moments.”
