Why is this important?
The number of homes sold is an indicator of overall demand for housing and signifies a robust economy [i]. Homes sold includes both existing homes and the sale of new units when supply is increasing. In a strong economy, people feel confident investing in home ownership when housing prices are rising and expected to provide capital gains. Housing turnover is also stimulated by incomes rising relative to housing prices and by lower mortgage interest rates which encourage borrowing [ii].
For sellers, a high and increasing number of homes sold may indicate wealth creation from the sale of a property; however, such a trend may indicate increased competition for potential buyers. Homes sold can also be compared across housing types to understand the distribution of units sold in a certain market.
[i] Oppenheimer, Lauren. “There’s No Place Like Home: Housing Marked Indicators.” Third Way. 13 Dec 2013. Web. <http://www.thirdway.org/report/theres-no-place-like-home-housing-market-indicators>.
[ii] Stutely, Richard. Guide to Economic Indicators: Making Sense of Economics. London: Economist Books, 2006.