An appraiser researching competition from builders finds 160 new-construction closed sales in the prior period and 216 in the current period. What is the percent change in new-construction closed sales?
Correct Answer
C) 35 percent
Percentage change = (216 − 160)/160 × 100 = 35%. Keep the stated numerator, denominator and units distinct. Common errors: dividing by the current figure instead of the prior figure gives 26 percent; reporting the current level as a percentage of the prior level gives 135 percent; misplacing the decimal (×10 instead of ×100) gives 4 percent.
Why This Is the Correct Answer
Option C is correct because percentage change = (216 - 160) / 160 x 100 = 56 / 160 x 100 = 35%. The prior-period count of 160 is the base for measuring the change.
Why the Other Options Are Wrong
Option A: 4 percent
Option A, 4 percent, comes from misplacing the decimal by multiplying by 10 instead of 100: (216 - 160) / 160 x 10 = 3.5, about 4. The correct result is 35%.
Option B: 26 percent
Option B, 26 percent, comes from dividing by the current figure instead of the prior figure: (216 - 160) / 216 x 100 = 25.9, about 26. Using the prior count of 160 as the base gives 35%.
Option D: 135 percent
Option D, 135 percent, is the current level as a percentage of the prior level: 216 / 160 x 100 = 135%. The change is 135% minus 100%, or 35%.
New minus old, over old
Percent change equals new minus old, divided by old, times 100; the old figure is the yardstick.
How to use: Use this phrase for any period-to-period change in counts or prices.
Exam Tip
A result above 100% usually means you reported a ratio of levels rather than a change; subtract 100% to get the change.
Common Mistakes to Avoid
- -Using the current period as the base
- -Reporting 135% as the increase
- -Dropping a factor of 10 when converting to a percent
Concept Deep Dive
Analysis
This question tests the same percentage change formula applied to new-construction closed sales. The increase from 160 to 216 is divided by the prior-period count. The wrong answers come from using the current count as the base, reporting the ratio of levels, or a decimal error.
Background Knowledge
New-construction sales activity can signal builder confidence and competition for resale homes. Measuring the change against the prior period shows the direction and strength of that trend.
Real-World Application
An appraiser in a growing area notes that new-construction closings rose from 160 to 216 between periods. She reports a 35% increase and considers whether builder competition is affecting resale pricing.
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