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Realtors Understated Housing Collapse?

From the Wall Street Journal:

Home Sales Data Doubted

Realtor Group May Have Overstated Number of Existing Houses Sold Since 2007

FEBRUARY 22, 2011

The housing crash may have been more severe than initial estimates have shown.

The National Association of Realtors, which produces a widely watched monthly estimate of sales of previously owned homes, is examining the possibility that it over-counted U.S. home sales dating back as far as 2007.

The group reported that there were 4.9 million sales of previously owned homes in 2010, down 5.7% from 5.2 million in 2009. But CoreLogic, a real-estate analytics firm based in Santa Ana, Calif., counted just 3.3 million homes sales last year, a drop of 10.8% from 3.7 million in 2009. CoreLogic says NAR could have overstated home sales by as much as 20%.

If so, this would indicate that the housing meltdown was an even larger factor in the recession than previously believed.

While revisions wouldn’t affect reported home-price numbers, they could show that the housing market faces a bigger overhang in inventory, given the weaker demand.

In December, NAR said that it would take 8.1 months to sell some 3.6 million homes listed for sale at the current pace, but the number of months it would take could be even higher if sales are revised down.

Meaning that there are even more houses on the market than were previously feared. And they will sell that much slower.

Any revisions wouldn’t have an impact on homeowners, but it could have consequences for the real-estate industry…

We suspect this would have an impact on homeowners, too.

NAR said the data, which are used by economists, investors and the real-estate industry to gauge the health of the housing market, could be revised downward this summer

Economists say any overstatement is the result of difficulty tracking data during market corrections. "This is an economic data issue, not a gaming-the-numbers issue," said Sam Khater, senior economist at CoreLogic. "Any time you get big shifts in the market, the numbers go haywire for a bit." …

Several economists approached NAR late last year with questions about its modeling. NAR economists promised to study the issue during a December conference call that included economists from the Mortgage Bankers Association, Fannie Mae, Freddie Mac, the Federal Reserve, the Federal Housing Finance Agency and CoreLogic.

Economists from the Mortgage Bankers Association said they became skeptical after the MBA’s index of mortgage-purchase applications appeared to be a less reliable indicator of home sales. The index had been closely correlated to NAR existing home-sales data until 2007. Even assuming a high share of all-cash sales, purchase-loan application data suggests that home sales have been overstated by 10% to 15%, said Jay Brinkmann, the MBA’s chief economist.

"If they are off by this much, this consistently, it would be sending the wrong signal to the market," said Mr. Brinkmann

If housing sales since 2007 have been 20% – or even only 10% – less than what we thought, that is definitely bad news for the market.

This article was posted by Steve on Tuesday, February 22nd, 2011. Comments are currently closed.

5 Responses to “Realtors Understated Housing Collapse?”

  1. River0 says:

    Government statistics about everything are highly suspect. They’re forever “revising” previously reported stats, and they issue inflation statistics “excluding food and fuel costs”. Yeah, you’ll be fine as long as you don’t use food and fuel!

    Toaday’s Bllomberg Financial News reports ‘Bond Market Swaps Support Bernanke’s Benign Inflation View’. Yup, that’s right, no inflation on the horizon!

    Then the economy tanks and nobody’s responsible. The Regime Media – which should be the watchdog on this story – is hopeless, perfidious, and rotten to the core

  2. proreason says:

    It’s not a lie, it’s Impressionism.

  3. tranquil.night says:

    More like Obama overstated the success of his emergency Loan Modification Programs.

    But the Big Lie is that Liberals want you to own your own home in the first place. Just like those Wisconsin teachers are all for the children, right?

  4. untrainable says:

    So when do my taxes get revised down to match the freefall value of my house?

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