Thursday, February 05, 2009
Those of you who follow the two national reports on home sales - new home sales from the Commerce Department and existing home sales from the National Association of Realtors - have no doubt noticed that new home sales just keep falling while existing home sales have stabilized somewhat over the last year or so, largely due to a big increase in distressed sales.
What would happen if those foreclosures and short-sales were removed?
Note that, since there is no readily available data series for the percentage of existing home sales that are distressed sales, the following approximation was used, which may or may not be accurate prior to about 2007 (the latest figure of 45 percent comes from the NAR):
Distressed sales were estimated at two percent from 2002 to 2004, increasing linearly to 5 percent, 10 percent, 20 percent, and then 45 percent in 2005, 2006, 2007, and 2008, respectively.