There’s an old Peanuts cartoon with the beleaguered Charlie Brown on the baseball field, absorbing another beating. One of the characters begins quoting a line of statistics, and is told, “Tell your statistics to shut up.”
Nice analogy on how numbers can say whatever you want them to say, a subject that’s been bouncing around the newsroom as we weigh how to best report the highs and lows of the Wichita housing market.
There’s a different set of numbers out there called “pending home sales,” or sales gone to contract. The National Association of Realtors produces a Pending Home Sales Index, and trumpets it as a “leading indicator of housing market activity.”
Check this link for NAR’s definition of a pending home sale.
The pending sale numbers first reared their heads down here at the Eagleland Businessplex last year as the Wichita housing market began its slide downward from record levels. It came as a small portion of the local residential industry began to implore the Eagle to put a more positive spin on the declining monthly home sales numbers.
Today, a year later, we tend to look at the pending sales numbers this way: A contract is not a sale until the deal closes. NAR states in its link that it believes 80 percent of all pending sales close; after some anecdotal checking locally, agents and brokers put that number at 65 to 70 percent in Wichita.
Thus, we’re not inclined to attach much value to a “pending home sale” report. If the deal closes, it’ll show up in the Wichita numbers a month or two later. But I’m interested in your feedback. Let me know what you think about the pending home sale as a reliable measure of real estate activity.