Existing Home Sales Median Prices Show Volatility

 

National Association of Realtors index measures the median sale prices for existing homes in 20 metropolitan statistical areas. The information is gathered from local Realtor associations and nationwide multiple listing services. Standard & Poors said that the median home price calculation is easy to understand but the sample selection bias causes the mix of homes to shift over time.
Courtesy of Mortgage News Daily

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Home Price Index shows home price behavior based on market-only sales and on combined sales using market and distress sale data, thus providing an insight into the impact of distressed sales. The methodology uses repeat sales over a 30 year database to track changes over time.  It covers 6,173 ZIP codes, 569 core-based statistical areas, and 1,016 counties in all 50 states and the District of Colombia.

Despite month-to-month divergence, the indices generally show similar trends over the long run.  Their volatility, however, varies over time because of the location and types of loans covered, loan limits, data sources, and selection basis.

Those indices that are based on repeat sales are most widely used to measure home price behavior but they are also often revised as additional sales become available.  The median price methodology suffers the most from sampling selection bias as the mix of homes in the sample shifts over time.  This shift may also affect the repeat sales-based indices.

– Courtesy of Mortgage News Daily