Oops – NAR overestimated real estate sales by 14%

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.

“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.

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.

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. 

THE GOOD NEWS

In short, the stats below would indicate that the market is stabilizing.   Sales are up, inventory is down, foreclosure sales are down.  All indications are that we are, ever so slowly, moving towards a stable market.

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.  A six-month inventory is a balanced market.

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.

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.