Existing home sales measure the number of previously owned single-family homes, condos, and co-ops sold during the month, reported by the National Association of Realtors. This represents 80-90% of total housing market activity since far more existing homes trade than new construction. Sales count at closing (when title transfers), lagging actual purchase decisions by 30-60 days due to financing and closing processes.
Why This Matters
Existing home sales are the largest component of housing market activity and a key indicator of consumer confidence and mortgage market health. Unlike new home sales (which drive construction), existing sales primarily reflect household mobility, wealth effects, and credit availability. Rising sales signal consumer confidence and economic strength, while falling sales indicate affordability pressures from high rates or prices, or weakening buyer sentiment.
Trading Implications
Rising existing sales boost home improvement retailers, moving companies, and mortgage originators while signaling economic strength favoring cyclical stocks. Falling sales pressure these sectors and often precede broader economic weakness. Watch inventory levels alongside sales—low inventory with high sales signals supply constraints and coming price increases, while high inventory with low sales warns of market correction ahead. The metric lags purchase decisions by 1-2 months.