Making sense of seemingly contradictory housing reports
So what's the deal with the latest housing numbers?
After a spate of gloomy real estate news, the Massachusetts Association of Realtors reports today that home sales jumped 31 percent in May.
Yet a national survey of Realtors reports a 45 percent drop in sales activity in May - numbers mirrored in a recent survey of local real estate agents.
What gives? Can these two reports - one pointing to a booming market, the other to a budding slump - both be correct?
The short answer is that yes, both are correct. But when looking at housing numbers, at least for the next few months, we need to divide the market up into two periods, BCE and ACE.
BCE, or Before Credit Expiration, refers to real estate sales that took place before the $18 billion home buyer tax credit expired on April 30th. The 31 percent jump in home sales in May that MAR is touting may have wrapped up in May but, given the lengthy closing process, were first put under agreement in March.
So the MAR report is not exactly new news - it's pretty well known now that the tax credit artificially boosted sales this spring.
But the recent Campbell survey of 3,000 Realtors across the country - the one that points to a nearly 50 percent drop in activity May - falls clearly on the ACE side of our time line. It measures activity after the expiration of tax credit and is the truest indicator of current demand, as opposed to the MAR report, which is not a measure of current activity but rather a look-back at the rather unusual spring market.
Of course, there's always the possibility that Congress might weaken as housing numbers grow gloomier and revive the home buyer tax credit.
That would certainly mess up my nice little categories.
Still, Senate Majority Leader Harry Reid's failure to extend the closing time for buyers who put homes under agreement before the tax credit expired on April 30th is telling.
Right now, the enthusiasm in Washington for another round of credits appears weak, but of course that could change if the housing market continues to slide.
