Average vs. Home Prices in the Frequent Sales Index

by Calculated risk on 7/28/2020 01:14:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Average vs. Home Price Recurring Sales Index

Excerpts:

Perhaps the most timely home price report for existing homes is the National Association of Realtors® (NAR) monthly Existing Home Sales Report. Each month NAR announces average prices for closed sales. Note: Average prices are distorted by this combination (recurring sales indices like Case-Shiller and FHFA are likely to be a better price gauge).

But even the average price is late. For example, the recently released June report was for contracts signed in April and May.

Here is a graph comparing the annual change in average NAR prices against the Case-Shiller National Index:

Annual change in average price peaked at 25.2% in May 2021 and slowed to 13.3% in June (still a very strong year-over-year price increase). The average price is not seasonally adjusted, it usually goes down in July, and I expect a larger than normal drop in July.

Generally, The average price is driving the Case-Shiller Index, and I expect Case-Shiller to show much slower year-over-year growth over the next several months.

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