What is being counted and when?

U.S. new home sales are estimates of new single-family home sales released by the Census Bureau and others, based on the time of contract signing or deposit payment. This may include contracts signed before construction is completed.

NAR's existing home sales are based on the completion of transactions for existing single-family homes, townhouses, condos, etc. Because it takes time from contract to final payment and transfer of ownership, do not view the same month's figures for new homes and existing homes as demand at the same point in time.

Does it mean 600,000 units were sold in a month?

Major headlines often use the Seasonally Adjusted Annual Rate (SAAR). This is a value converted to represent the pace of that month, adjusted for seasonal effects, if it were maintained for 1 years. A hypothetical annual rate of 600,000 units does not simply divide into a monthly pace of about 50,000 units, and it is not exactly the same as the actual unadjusted monthly sales volume.

Monthly estimates can have large sampling errors and revisions. Do not conclude that a one-month surge represents sustained growth; check multi-month averages, revisions, and confidence intervals together.

Demand is not the only cause of a decline in sales.

If purchasing burdens increase due to expensive loans, demand may decrease. At the same time, if existing homeowners do not sell their homes to maintain low-interest loans, transactions may decrease due to a lack of inventory. A decrease in transaction volume does not always accompany a price crash.

Look at sales volume, inventory, months of supply at the current sales pace, and median prices together. Since the median price changes depending on the composition of transactions between expensive and cheap homes, do not interpret it directly as the price appreciation rate of the same home.

Permits, housing starts, and sales are all different.

Building permits represent approval for future construction, while housing starts indicate the actual start of construction. Not all permits lead to starts, and not all started homes are sold immediately. Distinguish between single-family and multi-family homes.

Home transactions are linked to spending on furniture, appliances, building materials, loans, and moving. The transfer of ownership of existing homes itself and the GDP contribution of new construction are different, and transaction-related services are separate economic activities.

Through what channels does it connect to the Nasdaq?

Weakening housing demand can be read as a signal of interest rate burdens and economic slowdown. Conversely, a recovery in transactions after a decline in mortgage rates can support household demand. There is a direct impact on construction, finance, and consumer-related sectors, and there may be an indirect impact on tech stocks through interest rate expectations and paths for consumption and corporate investment.

There is no rule that the Nasdaq rises when home sales rise. First, find an explanation for what has changed among interest rates, inventory constraints, or household income.

Check what you have read.

• Is it a new contract or a completed existing transaction?
• Did you check whether it is an annual rate or the actual number of units?
• Did you look at inventory, prices, and loan interest rates together?
• Have you considered the revisions and sampling errors?

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