Source: Calculated Risk
Source: Calculated Risk

I have heard a fair amount of chatter about the effect our awful winter had on home sales.

Let’s take a look at new and existing home sales to see what we can find.

The U.S. Census Bureau and the Department of Housing and Urban Development jointly release data for new residential sales. They define a sale as a “deposit taken or sales agreement signed,” an event that occurs fairly early in the transaction process.

The weather in March probably had only a minor effect on new home sales, making the recent slump even more significant.

According to the National Association of Realtors, existing home sales, which account for 85 to 90 percent of total sales, are based on "transaction closings from Multiple Listing Services.” These data can lag new home sales by three months or more. Why? Because before closing, a home must be found, a purchase price agreed upon, a contract negotiated and a mortgage secured. After all that, the closing date is set to accommodate the key parties -- along with the lawyers, banks and title service.

Hence, the data for existing home sales in March are likely suffering the lingering hangover from the unusually bad weather in December, January and February.

We'll find out soon enough if the current softness in residential real estate is weather-driven or if it reflects genuine economic weakness.

To contact the author of this article:
Barry Ritholtz at britholtz3@bloomberg.net.

To contact the editor responsible for this article:
Alex Bruns at abruns@bloomberg.net.