The National Association of Realtors says it overestimated home sales by more than 14 percent since 2007 because an adjustment that the trade group makes to data it collects from multiple listing services to account for sales that take place outside of MLSs got out of whack over time.
NAR says it’s fixed the problem and "rebenchmarked" statistics going back to 2007, when it said its adjustments began to diverge from previous assumptions about how many sales take place outside of MLSs.
The trade group blamed much of the problem on a decline in "for sale by owner" sales — properties not represented by real estate brokers and therefore not listed in an MLS.
NAR said consumer survey data show FSBOs accounted for 9 percent of sales in 2010, down from 16 percent in 2000.
"In addition to a decline in FSBO transactions, more builders began marketing new properties through real estate brokers (and those sales) weren’t completely filtered from the existing-home data," NAR Chief Economist Lawrence Yun said in a statement.
"Some property listings on more than one MLS, and issues related to house flipping, also contributed to the downward revisions."
After rebenchmarking 2010 data, NAR now says there were 4.19 million existing-home sales last year, down 14.6 percent from the 4.9 million sales the group previously reported. For 2007 through 2010, sales and inventory were 14.3 percent less than previously reported, the group said.
Source: Calculated Risk blog.
NAR said the rebenchmarking doesn’t affect previously reported median home prices or months’ supply of homes for sale. Previously reported month-to-month trends in housing sales were also unaffected, because sales for each month have been revised downward.
Although rebenchmarking will also be done at the state level, data reported by local MLSs and Realtor associations is still valid, because those numbers are published before they are adjusted.
The need to rebenchmark NAR’s existing-home sales statistics is generating national headlines that could damage the trade group’s credibility.
Anticipating NAR’s revisions, the Greater Tulsa Association of Realtors in Oklahoma last week issued a press release reassuring consumers that "the newly revised national data has no impact for local homebuyers" and that "rates are (the) lowest in history and it’s still a great time to buy in Tulsa."
Phoenix-based broker Jay Thompson said that so far his clients haven’t voiced any concerns about NAR’s need to revise its existing-home sales statistics.
"I think within the real state industry we’re probably more concerned about it, and certainly more aware of it, than consumers are," Thompson said.
The MLS numbers "are good and solid," he said, and his clients put more faith in the MLS-based local market reports he provides them with rather than media reports on national sales figures.
"The mainstream media tends to blow these things out of proportion," Thompson said. "I have no evidence that buyers and sellers pay any attention to the numbers that come out of NAR. They see the headlines but it never comes up in conversation."
NAR’s national statistics are important to economists, policymakers and others who make decisions based on macro-level data including national home sales.
The benchmark revisions, for example, will require the U.S. Bureau of Economic Analysis to make a small downward adjustment to its estimates of national gross domestic product (GDP). That’s because the bureau relies on NAR’s existing-home sales figures to estimate real estate brokers’ commissions on the sale of residential structures, most recently pegged at $55.5 billion a year, down from a peak of $109.9 billion in 2005.
If that figure were adjusted downward by 14 percent, the $7 billion reduction would have only a slight effect on the U.S.’s $15 trillion GDP. Brokers would not be affected because they collect actual, rather than estimated, commissions.
NAR said that in the process of rebenchmarking, it consulted with the Federal Reserve Board, the Department of Housing and Urban Development, Freddie Mac, Fannie Mae, the Mortgage Bankers Association, the National Association of Home Builders, CoreLogic, and individual economists.
The latest, rebenchmarked data from NAR shows existing-home sales increasing by 4 percent from October to November, to a seasonally adjusted annual rate of 4.42 million homes — a 12.2 percent increase from a year ago, when homes were selling at a pace of 3.94 million units a year.
Housing inventory was down 5.8 percent from October to 2.58 million existing homes for sale, a seven-month supply at the current sales pace. Inventories peaked at a record 4.04 million in July 2007, NAR said, citing the rebenchmarked figures.
The national median existing-home price was $164,200 in November, down 3.5 percent from a year ago.
Distressed homes, including short sales and homes repossessed by lenders, accounted for 29 percent of sales in November, down from 33 percent a year ago. NAR said 19 percent of home sales were lender-owned properties and 10 percent were short sales.
All-cash sales — mostly to investors — accounted for 28 percent of existing-home sales, down from 29 percent in October and 31 percent at the same time a year ago.
First-time buyers accounted for 35 percent of existing-home sales, up from 34 percent in October and 32 percent in November 2010.
Breaking down existing-home sales by category, NAR said single-family home sales were up 4.5 percent from October to a seasonally adjusted annual rate of 3.95 million, a 12.9 percent increase from a year ago. The median existing single-family home price was $164,100, down 4 percent from a year ago.
Existing condominium and co-op sales were unchanged from October, with transactions closing at a seasonally adjusted annual rate of 470,000, up 6.8 percent from a year ago. The median existing-condo price was $164,600, down 0.2 percent from a year ago.
Regionally, existing-home sales in the Northeast were up 9.8 percent from October to an annual pace of 560,000, a 7.7 percent increase from a year ago. The median price in the Northeast was $240,200, down 0.1 percent from a year ago.
Existing-home sales in the Midwest were up 4.3 percent from October, to a seasonally adjusted annual rate of 960,000, a 15.7 percent increase from a year ago. The median price in the Midwest was $133,400, down 4 percent from a year ago.
In the South, existing-home sales were up 2.4 percent from October to an annual pace of 1.74 million, a 12.3 percent increase from a year ago. The median price in the South was $143,300, down 2.1 percent from a year ago.
Existing-home sales in the West were up 3.6 percent from October to an annual level of 1.16 million, up 11.5 percent from a year ago. The median price in the West was $195,300, down 8.4 percent from a year ago.
