By combining industry data, proprietary company transactional data and publicly available Google Trends data, Auction.com has launched a new report called “Nowcast” to predict home sales as they are occurring.
Findings from the first Auction.com Nowcast predict that existing home sales in October will fall between seasonally adjusted averages of 4.967 and 5.380 million annual sales, with a targeted prediction of 5.178 million.
The new report is based on data modeling developed by Google Chief Economist Hal Varian, who defines “Nowcasting” as “contemporaneous forecasting” — basically an ability to predict what is happening as it occurs. Auction.com applied Varian’s theories regarding the use of publicly available and anonymous Google Trends data to the specific question of predicting real estate market activity.
“Google Trends data — which is anonymized, publicly available search information — offers valuable insights into current economic and consumer trends,” noted Varian. “By layering industry-specific transactional data and subject matter expertise over that search data, organizations such as Auction.com are able to create powerful predictive models for accurately forecasting buying behavior in the present and for the coming months.”
Auction.com plans to issue its monthly Nowcast near the middle of each month, once analysis can be completed on early economic, industry and proprietary transactional data combined with related online search term activity that indicates home buying intent. The company is currently running multiple models and layering in additional information variables to increase its accuracy in predicting existing home sales for the given month, with the intention of expanding upon this ability in the future to similarly predict new home sales as well as home pricing trends.
“Auction.com’s ability to deliver timely analysis of current market conditions can provide critical insight and enhanced predictability to industry professionals, economists and government entities alike,” said Rick Sharga, executive vice president for Auction.com. “Since real estate trends play such a vital role in our overall economy, there’s a compelling need for accurate, more timely housing market forecasts, rather than data that comes out two to four weeks later.”
Internal testing for the months of April through September, 2014 showed Auction.com estimates varied from actual existing home sales reports by more than 100,000 sales one third of the time.
“We’re thrilled to be able to launch the Auction.com Real Estate Nowcast™ — a very tangible result of our strategic relationship with Google Capital,” said Jeff Frieden, CEO and co-founder of Auction.com. “Their guidance, along with the advice of Google employees such as Dr. Varian, has helped us really make the most of Google Trends data as we seek to provide a better snapshot of the real estate market for consumers, investors and real estate professionals.”