We are into the slowest period of the real estate year. The last four months of any year are significantly less active than the first four months of the year.
That said, we are seeing more buyer activity than last year.
Sales of existing homes in the Washington region were up 12 percent in September compared to last year. With a total of 6,203 ratified contracts, it was a better September than 2010, 2008 and 2007. I left out September 2009 because that month saw 6,955 sales because of those federal tax credits that were boosting sales activity.
In case you are wondering what “ratified contracts” are, let me explain. In this column, I always provide the number of purchase contracts for existing homes that were completed in a particular month. “Ratified” means the buyer and seller both signed off on the contract, which makes it binding.
That does not mean, of course, that problems don’t arise. Sometimes the buyer can’t get a loan or something is found in the home inspection that causes the buyer to back out of the deal. Some ratified contracts don’t go to closing.
The most accurate measure of home sales is to look at the number of homes that actually go to closing. But there’s a problem with those figures. Because home inspections have to be done and banks, title companies and settlement agencies all have jobs to do, closings often don’t happen until weeks or months after the contract is ratified.
In September, 7,792 sales were closed (or “settled”) in the Washington region. That’s higher than the 6,203 contracts for September.
How can that be? Well, September’s closings were the culmination of sales contracts that were ratified in June, July and August. It’s even possible that some were from the spring because of various contingencies that are written into some sales contracts.
Here’s the point: The number of closings indicates how many homes ultimately are transferred from one owner to another. But those figures tell us little about the pace of the market, and they don’t tell us the mood of buyers in a given month. That is much more newsworthy, even if a certain number of the contracts never go to closing.
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