Lawrence Yun, chief economist and senior vice president of the National Association of Realtors (NAR), issued a statement on September 3 reporting that despite reports of more jobs, lower interest rates, and overall economic improvement, home sales are typically slow for the autumn months.
Yun said in his statement that the autumn and winter months have historically been unkind to the housing market. He reports an average decline of 16.4 percent in home sales month-over-month from August to September over the last 15 years. After holding steady in October, Yun said, home sales typically take another 8 percent dive in November. Figures for December usually match those in November before they plummet by 27 percent in January, then begin the slow rebound as winter turns to spring.
"Despite the weaker business opportunities in the upcoming autumn and winter months, media headlines on home sales are likely to show an upturn and possible strengthening conditions based on NAR home sales releases," Yun said in the statement. "What gives?"
The difference is in seasonal adjustments, Yun said. Most economic and housing data (including unemployment and GDP) reported in the media is seasonally adjusted in order to "better gauge an underlying economic trend of slight weakening or slight strengthening," he said.
Yun cited Myrtle Beach as an example of how seasonally adjusted employment data can make numbers appear more favorable than they actually are. He said the South Carolina beach town usually has about 15,000 more jobs available in summer than the rest of the year; if one summer there were only 6,000 more jobs available in Myrtle Beach, then the seasonally adjusted data would indicate that employment in the city was doing worse.
When applied to housing, if the annual average month-over-month decline in home sales from August to September is 16.4 percent and one year they decline only 8 percent in September, the media reports that that housing market has improved, Yun said. And seasonally adjusted data is commonly what consumers are exposed to through the media.
"The media just may be reporting improving home sales throughout the upcoming autumn and winter," Yun said. "This does not mean a home seller should be raising the listing price. Invariably, there are fewer home buyers in autumn and winter."