New home sales and existing home sales are released each month at about
the same time. Many comparisons are made between the two series, but before
doing any comparisons, one must be aware of some definition differences
that affect the timing of the statistics.
The Census Bureau collects new home sales based upon the following definition:
"A sale of the new house occurs with the signing of a sales contract or
the acceptance of a deposit." The house can be in any stage of construction:
not yet started, under construction, or already completed. Typically about
25% of the houses are sold at the time of completion. The remaining 75%
are evenly split between those not yet started and those under construction.
Existing home sales data
are provided by the National Association of Realtors®. According
to them, "the majority of transactions are reported when the sales contract
is closed." Most transactions usually involve a mortgage which takes 30-60
days to close. Therefore an
existing home sale (closing) most likely involves a sales contract that
was signed a month or two prior.
Given the difference in definition,
new home sales usually lead existing home sales regarding changes in the
residential sales market by a month or two. For example, an existing home
sale in January, was probably signed 30 to 45 days earlier which would
have been in November or December. This is based on the usual time it takes
to obtain and close a mortgage.
Effective with January 2005, the National Association of Realtors created a new monthly series to overcome the lagging effect of the existing home sales definition. This new series is called Pending Home Sales and is based on sales of existing homes where the contract has been signed but the transaction has not been closed, making it roughly equivalent to the new home sales definition. Monthly estimates are expressed as an index where the year 2001 has been set to equal 100.0.