The National Association of Realtors on Wednesday will issue revised estimates for existing-home sales going back five years, saying the formula it had been using to adjust the sales data it collects from multiple listing services had drifted out of whack and was overestimating sales.
The benchmark revisions to existing-home sales data will show fewer homes changed hands than NAR had previously reported, the trade group said. But the revisions will show little change in previously reported trends in home sales, and no change in median home price, NAR said.
Also, because NAR is making a comparable downward adjustment to unsold inventory, the group said the revisions won’t change the months’ supply of homes for sale — a critical measure of the balance between supply and demand. Many housing analysts consider a six-month supply of homes for sale to be a healthy balance between supply and demand.
In February, mortgage and property data aggregator CoreLogic estimated that NAR was overestimating existing-home sales by 15 to 20 percent. CoreLogic estimated that unsold inventory on the market in November 2010 represented 16 months of supply, compared with NAR’s estimate of 9.5 months.
In announcing the pending revisions, NAR acknowledged that its national statistics on home sales are important to economists, policymakers and others seeking macro-level data. Rebenchmarking will also be done at the state level, NAR said.
But the group said homebuyers and sellers are most concerned with local market data, which is not affected by the rebenchmarking.
(In an unrelated incident, in July, the Illinois Association of Realtors said a software glitch had caused it to overestimate the median prices of home sales in the Chicago market in reports going back to November 2010.)
NAR adjusts the statistics it collects from local multiple listing services to account for sales that take place outside of the MLSs it has data from.
The group blamed an "up-drift" in the model going back to 2007 to growth in MLS coverage areas, geographic population shifts, a decline in for-sale-by-owner transactions, some new-home sales trickling into MLS data, and some individual sales being recorded in more than one MLS.
In a guest column published by Housing Wire, NAR Chief Economist Lawrence Yun said the "biggest reason for the revision is a decline in for-sale-by-owners, with more sellers turning to real estate agents to market their homes when the market softened. In essence, Realtors began to capture a greater market share."
NAR said it began its normal process for benchmarking sales at the beginning of 2011 "in consultation with outside housing market experts."
Data for the new benchmark was presented to and discussed with representatives of the Federal Reserve Board, the Department of Housing and Urban Development, Freddie Mac, Fannie Mae, Mortgage Bankers Association, National Association of Home Builders, CoreLogic, and individual economists, the group said.