Many press accounts presented the November data on existing homes sales as good news. This is surely at least in part true, they were up slightly from a very low October level. However, they were still down 20 percent from the year ago level and more than 30 percent from the peak levels hit in 2005. The more important point that was missed in most of the reporting is that the existing home sales data is giving us a dated picture on the housing market. It refers to completed sales. These sales were typically contracted six to eight weeks prior to the sale, which means that November sales data is primarily telling us about the state of the housing market in October or even September. The more recent data, most importantly existing home sales (which refers to contracts signed), paint a more negative picture. So this new report should be seen as providing very little evidence that the housing market is stabilizing.
--Dean Baker
