So back on Monday I posted a list of the houses that sold in July – this is the usual way that agents show what’s happening in the market. It’s useful to see what buyers are willing to pay for specific houses – if one of those houses is similar to yours, then you have a general idea of value for your house.
However, it doesn’t tell you anything about the market trends. Let’s use this past July as an example. 8 houses went to settlement in July, and most people would be forgiven for thinking that July was a busy month for real estate. But if you look at the chart below, you’ll see that it was actually a fairly light month – only 3 contracts were accepted in July.
From the chart above, you can see that March was the big month for sales so far this year. The settlements in July reflected contracts written anywhere from July 2011 through July 2012. That’s a pretty big range!
The National Association of REALTORS® (NAR) call it the Pending Home Sales Index and don’t count contracts until they’ve settled. I use it a little differently and don’t much care, for these purposes, if the contract settles or not. I want to see raw activity and a signed contract seems like a pretty good indicator of a serious and motivated buyer. Comparing those numbers month over month gives me an idea of how active the market is.
Tomorrow I’ll show a chart that reflects how many listings come on the market per month over the past 12 months. Based on the chart above, when would you go on the market?