Home Sales Success Rate Gaining Strength
One statistic that we have been maintaining at The Market Bulletin is a measurement that we refer to as the “Home Sales Success Rate.” Recently, the one-year trend had dropped from a two-year high, after returning from a low of 30% reached in June of 2009, but appears to be on the rise again.
By dividing the total number of closed sales by the total number of new listings, over a specific time period, we can show a trend that gives a hint at how many homes (as a percentage of the total) are actually selling.
Conversely, we can measure the home sales failure rate as the total number of listings that failed to sell over the past 365 days divided by the total number of listings taken during that same period of time.
- Success: 43%
- Failure: 57%
Sales Success Rates Still Too Low
So, in simplified terms, we can say that over the past year, roughly 43% of the homes that were listed actually sold, while 57% of the listings taken failed to sell.
The success trend currently appears to be on the rise, though we are concerned about the glut of homes in the shadow inventory that could hit the market at any time.
The failure trend once rose to 70% in June 2009 and it might be heading back to that level when these listings enter the market. We will keep a close eye on these activities because this trendanalysis points the way to the speed in which the recovery will take.