Here’s coverage of the stat release on second homes from NAR. [Second-home sales at all-time high [CNN]](

>Are home still a good buy? Americans seem to think so — they bought second homes, both as vacation properties but especially for investment purposes, in record numbers last year.

Source: Calculated Risk

A hat tip to [Northern New Jersey Real Estate Bubble]( for alerting me to the post on [Calculated Risk about Second Homes]( [[See larger graph.]](

Calculated Risk (CR) uses the numbers NAR actually reported on prior occasions to show how the current press release has indicated that something is wrong with their numbers. NAR says 39.9% of all sales in 2005 were second home sales.

_I find that number very hard to believe._

But Calculated Risk, using the actual figures, indicates that the number is closer to 47.2%.

_I find that number very hard to believe as well._

Nearly 50% of all home purchases were for investment purposes? I don’t see how.

Now think about the fact that the [Housing Indexes that I have discussed in recent posts]( will be based on these indexes. I can only imagine the potential litigation if NAR is really in error here – especially basing an index on data provided by a trade group rather than an independent resource.

Update: Calculated Risk revised the chart. [Corrected: Second Homes Graph](


  1. John Philip Mason April 6, 2006 at 9:11 am

    Well no matter what the final number turns out to be, is it possible the market is over-heated? It sounds like the overall real market stats are getting a tremendous boost from the second home market. If these “investors” are in it for the long haul and don’t care about values or rates of return, we are golden. But if they are buying on rising prices, speculation, and/or need a certain rate of return to “make it work,” we could be hit with just as much punch on the way down.

  2. J. Primm April 6, 2006 at 3:27 pm

    Long time reader, first time responder:

    While I share your general skepticism regarding NAR stats (only takes a few pages of a Lereah book to recognize he works for the trade industry), I believe I may have figured out why NAR cites a 39.9% share of the market for second homes. The 7.07 million is only for existing home sales, but some of the second homes would be new, right? If you add 1.3 million for new home sales (don’t know what the actual 2005 number, but 1.3 seemed reasonable for a 2005 annualized figure based on what I could find on the NAR website) the 39.9% figure makes sense.

    Thanks for all the enjoyment and insight your blog has provided me!

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