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Jonathan J Miller

Housing Data Is Old and Moldy

Data to gauge the housing market is hobbled by methodological problems, many of them related to seasonality and the lag from the time a contract is signed to when a sale is recorded.
A trailing indicator.
A trailing indicator.

Consumers rely on a monthly parade of reports to get a sense of the state of the U.S. housing market, thinking that the data offer near-instantaneous insights in much the way that a stock-market index does.

Seeing housing this way is a mistake: The information available is hobbled by the very nature of the market itself. Buying or selling a house is a slow, lumbering, inefficient process that takes months to complete. There is a significant lag time from a meeting of the minds between a buyer and a seller to when the sale gets reported to the public. Yet we hang on each report and the bold headlines they inspire without proper context or understanding.