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Home prices confound me

By Holden Lewis · Bankrate.com
Tuesday, June 24, 2014
Posted: 11 am ET

It's the confusing time of the month, when corporations, lobbyists and federal regulators trumpet their stats on home sales and home prices.

First numbers, then background

  • RealtyTrac released its residential and foreclosure sales report yesterday for May. "The median sales price of U.S. residential properties -- including both distressed and non-distressed sales -- was $180,000, up 6 percent from the previous month and up 13 percent from a year ago," RealtyTrac says.

    (The median price is the halfway point, where half of the houses cost more.)

  • The National Association of Realtors released its existing home sales report yesterday for May. It said the median price rose 5.9 percent from April to May, and 5.1 percent from May to May. That's not a math error. I'll explain in a sec.
  • The Federal Housing Finance Agency released its monthly house price index today for April. The median home price was unchanged from March to April, and up 5.9 percent from April to April.

Varying home price numbers

Month-over-month Year-over-year
RealtyTrac Month-over-month Up 6% Year-over-year Up 13%
National Association of Realtors Month-over-month Up 5.9% Year-over-year Up 5.1%
Federal Housing Finance Agency Month-over-month 0% Year-over-year Up 5.9%

That list, above, is in rising order of credibility, in my opinion. Your mileage may vary, depending on whether you belong to the "government can't do anything right" crowd. (Having worked solely for private enterprises, I have no illusions about the supposed superiority of corporations.)

They're not counting the same things

First, I'll point out that RealtyTrac and the Realtors are reporting home prices for May, while the slowpokes at FHFA are reporting prices for April. If the two "Real"s are accurate, prices surged in May, and FHFA's data will reflect that a month from now. Right? Not necessarily.

Besides compiling data from different periods, the three entitities are counting different dwellings. To put it rather crudely:

  • The RealtyTrac data reflects your life better if you own or want to buy a house that's worth $750,000 or more.
  • The Realtor data is more representative of your life if you are in the middle class, however you define that term, and you own or want to buy a house, condo or co-op.
  • The FHFA data speaks to you if a mortgage of more than $417,000 seems outlandish and you own or want to buy a single-family house. That's because FHFA's data is for single-family mortgages securitized by Fannie Mae and Freddie Mac, which, for the most part, top out at $417,000.

Rich people are on a home-shopping spree

According to RealtyTrac, sales have surged by about 25 percent in the last year for homes costing more than $750,000. Because expensive houses are a greater share of sales, median price went up.

As an analogy, think of a car dealer that sells Chevrolets and Cadillacs. If it sells 60 Chevys and 40 Caddies one month, and then 45 Chevys and 55 Caddies the next month, the median price rises, even the average price of a Chevrolet stays the same and the average price of a Cadillac remains the same.

Bottom line: RealtyTrac says the median price of a home was $180,000 in May.

What's up with the Realtors?

The National Association of Realtors says the median price of an existing home was $213,400 in May. That's up from $203,100 in May 2013 and up from $201,500 in April. So in that report, prices went down and then up.

Why the $33,400 discrepancy between RealtyTrac and the Realtors? You got me.

And FHFA? It doesn't release median prices. It gives you an index of which direction prices are moving and how fast, but not the actual underlying prices themselves.

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2 Comments
Philip Wade
July 10, 2014 at 12:54 am

Frequently handled good issues in the world in this article.Best wishes for the future.Thanks

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