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NAR: Little Impact Seen from Data Revision of Existing Home Sales

by devteam December 21st, 2011 | Share

As the National Association of Realtors®rn(NAR) first announced last week, its periodic rebenchmarking of existing homernsales data uncovered some problems with the manner in which sales were counted beginningrnin 2007.  NAR typically conducts a rebenchmarkingrnevery ten years when new Census Data is issued and has relied on that data asrnthe main source of information to support its own sales data gathered from thernvarious multiple listing services.</p

As the 2011 rebenchmarking began it wasrnnoted that a divergence in sales projections had developed over time betweenrnthe fixed model for projecting sales rates and the actual marketplace includingrna decline in for-sale-by-owner transactions, changes in areas covered by multiplernlisting services, geographic population shifts, sales being recorded in morernthan one MLS and delays in sales being reported.  </p

These factors resulted in a downward revisionrnin 2010 data of 14.6 percent from the 4.91 million existing home sales that NARrnhad projected to 4.19 million sales. rnFor the period 2007 to 2010 the downward revisions altered figures forrnboth sales and sales inventory by 14.3 percent.</p

Lawrence Yun, NAR Chief Economistrnsaid, “It appears that about half of the revisions result solely from a declinernin for-sale-by-owners (FSBOs), with more sellers turning to Realtors® to market their homes when thernmarket softened.  The FSBO market was overwhelmed during the housingrndownturn, and since most FSBOs are not reportedrnin MLSs, national estimates of existing-home sales began to diverge based onrnprevious assumptions,” Yun said.</p

NAR consumer survey data in 2000rnshowed FSBOs accounted for a 16 percent market share, which fell to a recordrnlow 9 percent in 2010. </p

At a press conference following thernrelease Judd Smith, speaking for NAR said that, despite the revisions to salesrnand inventory their relationship was unchanged so the impact would bernsmall.  The national sales figures arernimportant to policy makers and the revisions are expected to have a minorrnimpact on future revisions to Gross Domestic Product, but the changes are of nornimportance to consumers.  All real estaternis local, he said, and there were no changes to local MLS data nor were therernany changes to pricing information which is the most important factor forrnconsumers.</p

In response to a reporter Smith saidrnthat the increasing market share enjoyed by Realtors since the housing collapsern”in retrospect” should have alerted NAR to the need for rebenchmarking but thernprocess did begin as soon as anomalies were noted.  </p

NAR has now begun incorporating countyrnlevel recorders data to augment the Census data and will now rebenchmark on anrnannual basis. </p

Existing home sales data for Novemberrnwill be covered in a separate article.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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