Search Predicted Housing Drop

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Queries for “homes for sale” had started to drop over a month before the National Association of Realtors disclosed their existing home sales figures for July.

Analyst Bill Tancer at Hitwise noted his firm was not surprised at the drop in those sales. That is in sharp contrast to the headlines being made over the drop being a surprise to those who follow such economic figures.

Tancer showed how it should not have been that dramatic an eye-opener. His discussion of this “unexpected decline” in existing homes sales tended to match a decline Hitwise noted for the search term “homes for sale.”

A chart Tancer produced superimposes the figures released by NAR, and the search queries the firm has seen. Search queries fell through the second half of 2005, and the NAR data followed that down. When sales began to increase, as reflected in NAR’s numbers, a spike in search queries accompanied that.

“This is an excellent example of how search term volume on a term related to an economic indicator, can act as a leading indicator, helping us to predict future indicator movement,” Tancer wrote. He gave three possibilities for this:

1) The search query “homes for sale” is directly related to the subject indicator, the purchase of a home

2) Consumers interested in purchasing a home, likely search for “homes for sale” in advance of actually purchasing a home, from the data above, that gap can be anywhere between two weeks to a month.

3) The National Association of Realtors, and other organizations and government agencies require several weeks (three in this case) to compile and release their number, our search term data is based on weekly data, allowing us to chart volume every Monday for the previous week.

With this in mind, Tancer suggested people keep an eye out for the next time NAR releases its existing homes sales figures.

“Barring any unusual circumstances over the next week, our search term data indicates a reversal in the downward trend reported by NAR yesterday. The August numbers, scheduled to be released September 25th, should reflect that reversal.”

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David Utter is a staff writer for WebProNews covering technology and business.

Search Predicted Housing Drop
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