Sales of existing homes edged up for a third month in a row in January as sales of distressed properties, investor purchases and all-cash deals picked up from December, the National Association of Realtors said today.

Sales of existing single-family homes, townhomes, condos and co-ops were up 2.7 percent from December, to a seasonally adjusted annual rate of 5.36 million homes, NAR said.

That’s up 5.3 percent from a year ago — the first year-over-year increase in sales since last spring, when sales were boosted by the federal homebuyer tax credit.

At $158,800, the national median price for all housing types was down 3.7 percent from a year ago, with distressed properties accounting for 37 percent of all sales. The median price of a single-family home was down 2.7 percent, to $159,400.

Single-family existing-home sales and prices

Metropolitan statistical area
Median price Jan. 2010
Median price Jan. 2011
Annual change in price
Annual change in sales
Dallas-Fort Worth
Kansas City
Miami-Ft. Lauderdale
Minneapolis-St. Paul
New Orleans
New York-Northern New Jersey-Long Island
San Antonio
San Diego
St. Louis
Washington, DC

Source: National Association of Realtors

NAR said a separate survey showed first-time homebuyers accounted for just 29 percent of buyers, down from 40 percent a year ago when the tax credits were still in place.

Last month, bargain-hunting investors accounted for nearly one in four sales, and a record 32 percent of transactions were all-cash deals.

"Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand," said NAR Chief Economist Lawrence Yun in a statement. "With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes."

Although NAR is currently reviewing a benchmark adjustment that’s used to estimate the total number of existing home sales, median home prices and the month-to-month sales trends tracked in the survey would not be affected by any changes in the benchmark, NAR said.

Concerns that NAR may be overestimating the total number of existing home sales — first reported by the blog Calculated Risk in January — were detailed in a Feb. 15 report by property data and analytics firm CoreLogic.

CoreLogic analysts compared public records of 2010 home sales to NAR’s estimates, which are based on data collected from about 40 percent of the nation’s multiple listing services. NAR uses census data to create a benchmark adjustment that’s supposed to account for sales through MLSs it does not receive data from.

But MLS consolidation and a decline in the number of for-sale-by-owner sales could mean NAR is now capturing a greater percentage of existing-home sales and doesn’t need to make the same large adjustment, CoreLogic analysts said.

The report estimated that NAR’s methodology may overstate sales of existing homes by 15 to 20 percent. If that’s true, the slower pace of sales means that it could take longer than previously thought to clear the current overhang of homes on the market.

NAR, for example, had previously estimated that the unsold inventory of homes on the market in November represented 9.5 months of supply. CoreLogic said that because of the slower rate of sales, inventory probably was closer to 16 months of supply.

In economic terms, both estimates point to an oversupply of homes for sale and/or a lack of demand. A six-month inventory of homes for sale is generally considered to be a more even balance between supply and demand.

NAR estimates that total housing inventory at the end of January fell 5.1 percent from December, to 3.38 million existing homes available for sale. That would represent 7.6 months of supply at January’s sales pace, down from 8.2 months in December.

Looking back a year, inventory was up 3.1 percent when measured in raw number of homes. Measured in months of supply, inventory was at its lowest level since December 2009, when NAR estimates there was a 7.3-month supply of homes for sale.

It remains to be seen whether the months of supply estimate, which is tied to the rate of sales, holds up. NAR is not expected to complete its review of its existing home sales benchmark adjustment until this summer.

The months’ supply of homes for sale is a critical factor in forecasting where home prices are headed.

A national repeat-sales home-price index compiled by CoreLogic was down 5.1 percent in November from a year ago. If that trend continues, CoreLogic analysts expect national home prices will probably be down 10 percent year-over-year by spring.

NAR, on the other hand, in reporting a decline in the months’ supply of existing homes for sale from December to January, is interpreting that as a sign of price stability — at least for non-distressed sales.

"Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward," NAR President Ron Phipps said in a statement. "Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value."

NAR today released adjustments to historical data for 2008 through 2010 as part of an annual review of factors related to seasonal activity. Most of the revisions — which were applied to monthly seasonally adjusted annual sales rates and months’ supply of inventory — were "minor, with little or no impact on previous characterizations of the overall market," NAR said.

Some observers believe the benchmark adjustments will result in more significant revisions to estimates of the pace of home sales.

"The numbers reported today were estimated using the old method and will probably be revised down significantly, but they are still useful on a month-to-month basis," the blog Calculated Risk concluded.

NAR’s 2009 launch of its Realtors Property Resource LLC subsidiary put the Realtor association in direct competition with CoreLogic. RPR began offering analytics reports based on MLS data to lenders, investors, and government agencies in October.

CoreLogic has launched a competing product and is sharing revenue with MLSs, offering those that provide data to CoreLogic on an exclusive basis more generous terms.

That’s led some to question whether CoreLogic had an ulterior motive in questioning NAR’s existing-home sales data. But the Wall Street Journal this week reported that others share the concerns raised by CoreLogic. Several economists approached NAR late last year with questions about its modeling, the newspaper said.

"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," the Journal reported.

After the CoreLogic study was published, NAR’s research divisions released a "frequently asked questions" bulletin about its existing-home sales methodology.

When it was originally posted, the FAQ questioned the accuracy of CoreLogic’s data, saying that while it comes from courthouse recordings, it also "makes some assumptions about non-covered areas. Right now, CoreLogic and NAR data differ. However, it is unclear which is more accurate."

The FAQ has since been revised and several references to CoreLogic deleted.

NAR says the benchmarking — previously conducted every 10 years with the release of Census data — may be conducted more frequently in the future.

The Census no longer asks whether people have moved and bought a home, so a "brand new benchmarking process is needed," NAR said in the FAQ.

"NAR has already been in contact with all key housing economists in the industry and government agencies and a few in … academia about finding a new benchmarking process," the FAQ said. "We expect a new clean, agreed-upon benchmark figure by the summer of this year."

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