So, anyone watching the news lately would likely have seen two interesting numbers about housing. Admittedly though, you likely had a hard time hearing about them with all else happening in the country and across the globe.
How does this make sense and what does it mean?
To understand the disparity between the existing and the new home sales, it needs to be understood how each is measured. Existing home sales numbers are reported when the property closes; buyer brings money to the seller and seller physically hands the keys to the buyer (for clarity, we are only discussing condos and homes). New home sales are reported when the contract to purchase a new home is signed by the purchaser.
So, those familiar with buying an existing home know that it typically takes 30+ days (at least here in Michigan) to coordinate the lender, title company and the necessary paperwork to purchase a property. That means that of the numbers reported for February, the contracts were likely written in the middle to beginning of January. Meaning that buyers were 5.2% more anxious in January to purchase an existing home. In other words, this is at least a 30 day trailing indicator of the housing market.
The new home sales number, down 10.5% means, simply, that 10.5% fewer people were willing to sign on the bottom-line for a new home. With delivery of the home likely to be anywhere from 30 days to 6 months. Nearly a leading indicator of the housing market, in my book.
Alright, but what does this indicate? The existing home sales jump I would attribute to a relatively mild winter. At least here in Michigan, not a lot of folks express a desire to move in the winter. The new home sales numbers, if they are a leading indicator of the housing market, would indicate to me that folks are pulling tight their purse strings and hedging against rising interest rates. Heck, there's even a discussion on how the new home sales numbers are a good indicator that the Fed will be done shortly in raising interest rates.
Beating the Same Old Drum
Homes that are priced at market value and exude value will sell before everything else in the same market. If you are looking to sweeten the deal and get as much as possible for your home, check out this article from the Oakland Business Review about concessions in home sales. They specifically mention seller financing of buyer closing costs as one of the concessions. Other enticements to consider include: Home Warranty, one year's worth of association dues, a month's mortgage payment for the buyers, etc.