The Census Bureau does not make adjustments to the new home sales figures to account for cancellations of sales contracts. The Survey of Construction (SOC) is the instrument used to collect all data on housing starts, completions, and sales. This survey usually begins by sampling a building permit authorization, which is then tracked to find out when the housing unit starts, completes, and sells. When the owner or builder of a housing unit authorized by a permit is interviewed, one of the questions asked is whether the house is being built for sale. If it is, we then ask if the house has been sold (contract signed or earnest money exchanged). If the respondent reports that the unit has been sold, the survey does not follow up in subsequent months to find out if it is still sold or if the sale was cancelled. The house is removed from the “for sale” inventory and counted as sold for that month. If the house it is not yet started or under construction, it will be followed up until completion and then it will be dropped from the survey. Since we discontinue asking about the sale of the house after we collect a sale date, we never know if the sales contract is cancelled or if the house is ever resold. Therefore, the eventual purchase by a subsequent buyer is not counted in the survey; the same housing unit cannot be sold twice. As a result of our methodology, if conditions are worsening in the marketplace and cancellations are high, sales would be temporarily overestimated.

it seems like this methodology really skews data in a market where one of the top homebuilders is reporting cancellations at 42% in the last quarter.

the book, by the way, was talking about the days when credit card interest was tax deductible, and how the US eliminated this deduction but made up for it with tax-deductible mortgage interest payments, so the shopper with a home could retain a tax-advantaged position.

Rising prices get more people excited about buying, even though
they’re paying more. Falling prices make people less excited about
doing any transaction. This observation has broader economic
implications. Even if home prices don’t fall, sales could decline,
putting less money in people’s pockets and slowing the economy. That’s
evident in today’s stats from the California Association of Realtors.
Even though the median-priced home in California jumped 16% in November
to $548,400; sales declined 11.2%, to 579,560, from a year ago. “We are
starting to see the ‘soft landing’ we have been expecting,” said the
association’s chief economist Leslie Appleton-Young. And the reflex
effect McCaulley’s talking about.

it seems to me like leslie appleton-young and paul mccaulley can’t both be right. when a tradeable asset reaches an inflection point and starts its price motion in the opposite direction, it very often builds velocity on the way down. and mccaulley is describing, i think, a market that conforms to this type of behavior, i.e. the downturn tends to accelerate on the way down as people look around and see prices falling. so who is right? i guess time will tell.

The policy does not require brokers to disclose to clients that their listings would be withheld from some prospective purchasers as a result of the brokers’ opt-out decision. In addition, in the markets that have already implemented the Policy, brokers have already exercised their opt-out rights and have excluded their clients’ listings from broker operated VOWs, as well as from brokers who will use password protected Web sites to provide listings to their customers in the future.

brokers will not be required to tell their clients that listings are being kept off the internet, but in an increasingly buyers’ market, the sellers are almost certain to learn of this policy, and my guess is that they will NOT be pleased. if i were selling today, would i want my listing withheld from the internet? well the short answer is: no way.