The lead article in yesterday’s Charlotte Observer was interesting news.  The headline read “Charlotte homes sales rebound.”

Today’s High Point Enterprise had a similar lead article: “High Point home sales show large increase for October.”

Home sales were up 20% in Charlotte and 22% in High Point.  But the story behind the story is that these sales were primarily of existing homes, and the increase was catapulted, according to the Observer, by “low interest rates, a hefty tax credit, price discounts and pent-up demand . . . .”

There’s an apple/orange distinction between existing and new home sales that is worth comment.

With existing home sales, a bank earns mortgage fees, a home inspector earns $250 per home, an appraiser earns about the same, closing attorneys slightly more, and realtors earn six percent, and that’s about it.  To some extent, measures of existing home sales are reflections of habitational musical chairs.

New home sales are different and indicate other economic factors.  New homes — generally speaking — are homes within new subdivisions.  They are rough measures of population growth which roughly reflects economic growth.  New subdivisions mean substantial payments to raw land sellers, substantial contracts extended to paving companies (which buy aggregate and asphalt), water/sewer line contractors (who purchase pipe and equipment), and builders who purchase every component of a new home, from nails to sheetrock to shingles, and who employ everybody from plumbers and electricians to the guy who swings a hammer to set a 2 x 4.  New home developments also mean hefty fees to civil engineers, traffic engineers and attorneys, each of whom employs many.

The economic multiplier effect of new home sales is much greater than it is for existing home sales. 

From a planning perspective, new home sales — again, generally speaking — reflect expansions into areas formerly raw land. They are harbingers of sprawl.  Existing home sales reflect economic stability within an urban core and stronger municipal “downtown” economies.

Both existing and new home sales suffered an upper cut to the chin a year ago when the credit markets tightened and shriveled to nothing.  The credit markets (i.e. banks that lend money) are slowly returning.  As one banker from the company-formerly-known-as-Wachovia described it to me: “it’s just going to take time before these bad loans work their way through our financial intestines.”

At the time I thought the description was unnecessarily crude.  A year later, I find it to have been more than memorable.  I find it to be apt.