There has been a lot of talk about the National Association of Realtors having to revise their numbers downwards.
I wanted to jump on this story but I am afraid to speak without understanding what is going on here. Here is Larry Yun’s, Chief Economist at NAR, explanation from CNN’s article:
Yun said the database NAR uses to track existing home sales, the Multiple Listing Service (MLS), has led the real estate agency to over-count existing home sales for several reasons.
The MLS database only includes home sales listed by realtors, and excludes homes listed by owners, providing a very narrow view of the market. And because more people are using realtors to list their homes instead of selling them independently, realtor-listed sales numbers have become artificially inflated, said Yun.
In addition, some of the assumptions NAR used in calculating its data have become outdated, since they were based on 2000 Census data.
From my perspective, this a legitimate reason the data could be wrong. The MLS stats don’t record all the transactions, just those that have a Realtor involved. With this dramatic of a shift in the housing market, very few are selling their home on their own now and a higher percentage are using Realtors – which would change their formula. I question the reason why they were using 2000 Census Data, but I know there are big issues going on the credibility of the 2010 US Census. So either Census data numbers anyone uses are suspect. (CalculatedRisk has an article on that topic today, and they has been covering the issues that have been surfacing with the 2010 US Census for a while now.)
On a side note, you may remember an earlier post I had about the population of the Twin Cities. The data from the Met Council showed we were losing population, while the 2010 Census and ACS surveys showed we were increasing population. CalculatedRisk covered these problems as well. (Updated post on ACS by Calculated Risk)
This story will develop and we will be receiving the revised numbers soon. There are enough people on the band wagon throwing out accusations, so I will only make this short opinion. My opinion right now is that this is an error, not a manipulation. Time will tell if my opinion is accurate.
How this impacts the information I have been posting:
The numbers I have been using for the National stats are now in question. We will find out next week by how much when they release their revised figures. Based on Larry Yun’s statement, I don’t think we will be seeing earth shattering differences.
The local stats I believe are accurate. The primary source I have used for the local stats has been from the Minneapolis Area Association of Realtors and these are pure MLS stats, there is no re-calculation with Census Data. The only thing to keep in mind on these stats is the number of transactions that were For Sale By Owner in 2004, 2005 at the peak was more than it is today.
Even with the error in the data, it is still the most relevant source of the data.
I will continue to watch this story and keep you posted.
Going forward, we will have to question the Data I am sharing a little more. If you find information suspect, please post a comment about your perspective and we can all discuss it and become a little wiser.
UPDATE 12/16/2011: NAR will be releasing the revised data Dec 21st, along with the methodology.
- Lawler on NAR Revisions for 2007 through 2011 (calculatedriskblog.com)
- NAR: Downward Revisions for 2007 to 2011 Home Sales and Inventory to be released on Dec 21st (calculatedriskblog.com)
- Existing Home Sales Debacle, As Larry ‘Baghdad-Bob’ Yun Confirms Overstatement (zerohedge.com)
- NAR preps for revision of home sales (housingwire.com)
- A few comments on the expected NAR existing home sales revisions (calculatedriskblog.com)
- Somebody At The NAR Finally Decided Not To Laugh At The Joke That Is Their Marketing,,, I Mean Data (zerohedge.com)
- Realtors Group: Home Sales Worse Than Thought (foxbusiness.com)
- NAR: Sorry, But We’re Revising Down All Of The Existing Home Sales Data Since 2007 (tarpon.wordpress.com)
- Housing Bust to Look Worse With Sales Revised (blogs.wsj.com)