What is the seasonality factor in the pending home sales index?
The HomExpert Market Report researchers use the seasonality factors calculated by the National Association of Realtors. The seasonality factor is calculated into the pending sales index to observe the month-to-month buying-habit variances, which otherwise would distort the overall real estate picture. The annual rate for a particular month represents what the total number of sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. For example, home sales in the winter months are generally much slower than sales in the summer months, primarily because of differences in weather and families working around school calendars. These disparities tell us little about actual trends in the housing market because they are mostly a result of seasonal variances. Therefore, we need to remove seasonal variances and create an annualized rate to gain a greater perspective on how the resale market is performing.
