Magazine article Economic Trends

A Tale of Two Houses

Magazine article Economic Trends

A Tale of Two Houses

Article excerpt

03.05.07

For those of us waiting patiently to see what is going on in the housing market, January's numbers offer more of a headache than a relief. First, existing single-family home sales increased 3.5 percent in January, bringing some hope that perhaps the worst is behind us. Then a day later, we learned that new single-family home sales fell a whopping 16.6 percent during the same period. What does this imply for the housing market? A look at some medium-term trends may help us get a better grasp on what's going on.

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Even though the housing numbers are seasonally adjusted, they still tend to be fairly volatile and are often affected by the weather. This can make it difficult to pick up all underlying trend by looking at just a few months' data. By looking at a three-month moving average of the data, we are able to reduce the volatility somewhat without greatly disturbing the medium-term trend. …

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