New and 'organic' existing home sales agree
Once "flips" and distressed sales are omitted from existing homes sales figures, there is agreement between new and existing sales.
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'SoldAtTheTop' is not a pessimist by nature but a true skeptic and realist who prefers solid and sustained evidence of fundamental economic recovery to 'Goldilocks,' 'Green Shoots,' 'Mustard Seeds,' and wholesale speculation.
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The methodology employed by S&P vets out “flips”, new construction and even most distressed sales providing them with a solid base of true “arms-length” sales for which to base their more popular home prices series on.
As has been widely reported, some 30%-40% of all existing sales (as reported by the NAR) are distressed properties resulting in a significant gap between the trends in new and existing home sales.
Existing home sales have been essentially propped up by the high volume of distressed properties resulting in a poor indicator of the true trends for non-distressed typical existing home sales.
Yet, looking at the chart (see above) which compares the seasonally adjusted new home sales series and the non-seasonally adjusted S&P/Case-Shiller Composit-10 sale pair count series, both smoothed with a 12 month simple moving average, you can see that there is a great degree of correlation between the two trends.
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