Understanding Housing Data

Throughout the downturn, the mainstream press has suffered through the task of explaining the crisis to their readers. Some reporters have done better than others, but most have missed the point.

This story in USA Today is an example of a media outlet reporting on an oxymoron without seeming to realize it. Yes, more homes were sold during the period studied, a slight increase was noted.

But prices fell at the same time.

Existing home sales rose 3.7% from February to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors reported Wednesday. That marked the sixth monthly rise for existing home sales in the past eight months. "We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.

If the real estate crash taught us anything, it was to scrutinize the source of the statistic as carefully as the data itself. We all remember the reports NAR was putting out just prior to the crash. Perhaps those that sell homes can be forgiven for attempting to convince buyers that a recovery is imminent, but they should not be trusted.

In the same article, NAR reported that 40% of sales during the period were distressed homes, up from 35% a year ago. That’s a statistic worth considering.

Bottom line: we’re not in a recovery. Not yet.