Is the NAR Overstating RE Sales ?
“Beginning in 2006, NAR’s sales numbers began to look even more inflated relative to data collected by CoreLogic, the Mortgage Bankers Association, and the U.S. Census Bureau, a trend that has “continued and become more pronounced through 2010,” CoreLogic said in the February edition of its monthly report, “U.S. Housing and Mortgage Trends.”
>
Over the years, I have been a fairly consistent critic of the National Association of Realtors (NAR). I have accused them of being drunk, hallucinating, cheerleaders of the RE sector, regardless of the reality. I have savaged their inane promotional stunts — Recall “Its always a good time to generate a commission buy or sell a house!” (See this, this and this).
My criticism about the NAR was about the nonsensical commentary that always seem to accompany their data. I never had cause to challenge their actual reporting of Real Estate sales.
Until now.
CoreLogic, the property data aggregator, claims in a new report that “home sales fell more sharply last year than previously thought.” According to CoreLogic, statistics published by the National Association of Realtors overstate sales of existing homes by 15 to 20%.
That is the polite way to describe it; The NAR sales data showed that residential RE sales fell 5%, but according to CoreLogic’s data, the fall was actually 12%.
There are different methodologies used, and that could account for some of the different figures. The NAR bases their sales data on multiple listing services and large brokerage closings. They show in 2010, there were 4.9 million existing home sales — a drop of about 5%. CoreLogic collects data from public sales records via county recorders and courts; they estimate that there were only 3.6 million home sales — a drop of 12%.
The impact of this could be substantial. Consider inventory — using CoreLogic;s methodology, unsold inventory in November 2010 was16 months of supply, not the 9.5 months the NAR claimed.
Inman News explains the benchmarking issue:
“CoreLogic says one reason NAR’s existing-home sales data may be inflated is because the benchmark multiplier NAR analysts use to adjust for MLSs that they aren’t getting data from hasn’t been calibrated since 2004.
But there’s been consolidation among MLSs since then, CoreLogic noted, and a decline in the number of for-sale-by-owner sales outside the MLS and brokerage process. That means NAR is now capturing a greater percentage of existing-home sales and doesn’t need to make so large an adjustment when extrapolating its results.”
Quite fascinating.
Until the NAR does their benchmark revisions to historic sales data (later this year), I will assume that there will not be any resolution of this. I am loathe to give the benefit of the doubt to the NAR, but calling them data cheats maybe premature at this time. Sure, I have called them fools and eejits over the years, mocked them mercilessly for their money-losing blatherings, but I have never had reason to believe they were purposefully fudging the data.
If that turns out to be true, I will call for a full investigation and prosecution of them, but for now, I am willing to reserve judgment.
>
Source:
Decline in real estate sales greater than stated?
CoreLogic: NAR methodology appears to inflate home sales by 15-20%
Matt Carter
Inman News February 15, 2011
http://www.inman.com/news/2011/02/15/decline-in-real-estate-sales-greater-stated
Tweet
Facebook
Reddit
Digg this!
February 17th, 2011 at 8:30 am
NAR FAQ
http://www.realtor.org/research/research/ehs_benchmarking
February 17th, 2011 at 8:55 am
I doubt it. Lawrence Yun works for the NAR, and Lawrence Yun would never associate himself with any organization that would intentionally skew or misrepresent data to serve its own ends.
February 17th, 2011 at 9:00 am
Like I have been saying for 6 months. No where the bottom in home prices. I said then we have another 30% to go. I stand by that call. Nassau County on Long Island has no clue what they are in for as the reality of the situation pushe it ugly head out the window.
February 17th, 2011 at 9:10 am
maybe the Corelogic records miss because MERS sales do not get to county or court recorders
as you have reported?
NAR is the dregs of spinmeistering
i turned down a job there long time ago
but hard to believe they cooking basic surveying that badly
February 17th, 2011 at 9:15 am
I’d rather tell people that homeownership is a bedrock American value – and how strongly I feel about that – rather than scribble a trailer-truck-load of rigorous analysis, and “numbers” and stuff. You need to move on.
Tax cuts for homeowners!
–Lawrence Yun
P.S. I own your Congressperson.
February 17th, 2011 at 9:16 am
I scratch my head over the fact that, after all we’ve been through and are still going through the past three or four years,the 6% commission still lives and breaths today and is still so prevalent.
February 17th, 2011 at 9:22 am
That NAR publishes false data does not surprise me. That Economists who work for the NAR promote the NAR’s(it’s a trade group) agenda does not surprise me either. What does surprise me is how the NAR gets a free pass in the media, where their quotes are presented as fact.
February 17th, 2011 at 9:29 am
this makes me giggle so I have to share (OT BR- so delete at your leisure)
“Conservative pundit Glenn Beck said he will no longer use Google or its products because of perceived ties to government agencies and its involvement in the uprising in Egypt, he said on his Fox television program Wednesday.”
damn that Google- without them we would still have our man Mubarak at the helm in Egypt!
(not that the USG hasn’t been involved in propping up regimes all over the world [that's why the people love us!])
February 17th, 2011 at 9:43 am
now that the budget must stop assistance in home heating for the less fluent (in cash flow) .. well it seems the system will get its unintended consequence ie multi-family-person units .. gotta happen or freeze or move or die
February 17th, 2011 at 9:53 am
A 5% drop to 4.9 million sales imply there were 5.16 million sales of existing homes in 2009.
Therefore, wouldn’t sales of 3.6 million imply a much sharper dip than 12% YoY? Or am I missing something?
3.6/5.16 = approx. 70%. In other words, closer to a 30% decrease.
February 17th, 2011 at 9:55 am
Local blogger, http://seattlebubble.com/blog/2011/02/04/nwmls-prices-inventory-fall-sales-slowly-climb/, repeatedly compars the monthly Deed filings with the NWMLS reported monthly sales. The NWMLS sales are always greater than the filed deeds. Deeds are filed electronic at closing and if there is a discrepency it should be very small. Speculation is that the realtors are not accurate with their monthly entries, listing sales in a month different than the actual closing. Could this be a national NAR problem? Does it also effect listings? Just wondering?
February 17th, 2011 at 10:04 am
The local real estate reports that are faithfully reported in our local papers are always so ludicrous that it is laughable. A recent one was touting the reduced vacancy rate in a bunch of overbuilt condo buildings, yet those of us who walk by these buildings every day can see that some of them are totally empty. No tenants, nada, zilch! I suspect that some of these have been purchased as an investment in a bulk sale at some reduced price, but nobody is living there. So I suppose they are “sales” though in fact they are speculative investments.
February 17th, 2011 at 10:05 am
China Scraps Property Data, Clouding View
http://online.wsj.com/article/SB10001424052748703373404576147792827651116.html
At least we have an index.
— Lawrence Yun
February 17th, 2011 at 10:10 am
Realtors are the face of the RE business for most consumers. That they have come through the this crisis with little, to no blame for THEIR non-feasance is stunning.
February 17th, 2011 at 10:35 am
“Allow me to spell this out for you more specifically: MERS is an abomination, a legal blasphemy that should be destroyed before it unleashes the four horsemen of the apocalypse. I hope that clarifies this . . . ”
Why I read every day.
And if you’re not stopping to look at the quotes of the day you’re missing out.
February 17th, 2011 at 10:40 am
I am sure the IYR will skyrocket on this news.
February 17th, 2011 at 10:45 am
Compare:
It seems that the NAR is making a convenient mistake that overstates some numbers. There doesn’t seem to be a direct payoff, it just puts a more cheerful face on a bad situation, hiding the lack of recovery in the RE market. Nobody is really surprised by this.
With:
It seems that the FED is making a convenient mistake that overstates some numbers. There doesn’t seem to be a direct payoff, it just puts a more cheerful face on a bad situation, hiding the lack of recovery in the financial system. Nobody is really surprised by this.
I think this recovery is built on quicksand, but like yesterdays rules of thumb said, don’t fight the trend.
February 17th, 2011 at 11:02 am
I am always skeptical of data published by an organization about its own activity. There is always a conflict of interest.
February 17th, 2011 at 11:04 am
Over the years, I have been a fairly consistent critic of the National Association of Realtors (NAR). I have accused them of being drunk, hallucinating, cheerleaders of the RE sector, regardless of the reality.
—
Heh, heh – this was the complimentary part. :)
February 17th, 2011 at 12:10 pm
With little transparency in the NAR numbers they can manipulate however they wish. Lawrence Yun is an expensive whore for the NAR, simple as that. Every year from 2006-2011 he has said homes prices will appreciate and the down turn is over. When he says this again in 2015-2017 he will actually be correct. Anyone who trusts their numbers is simply ignorant.
February 17th, 2011 at 1:40 pm
What else is new, really?
Whole scale data manipulation is going on to make us ‘feel better’ about housing, Economy, sentiment, inflation etc. Perception ‘spin’ gets to win over reality when the vested interests want it that way and have ALL the tools and power.
ASk Prez W when he convinced 55% of American convinced re WMD in Iraq and thousands of youngsters to death.
February 17th, 2011 at 4:09 pm
[...] Note: Here’s Barry Ritholtz’s take over at the Big Picture: Is the NAR Overstating RE Sales ? [...]
February 17th, 2011 at 4:14 pm
CoreLogic Attacks NAR: Claims Sales Overstated 15% to 20%
http://matrix.millersamuel.com/?p=10476
February 17th, 2011 at 8:56 pm
http://www.calculatedriskblog.com/2011/02/nar-reponds-to-questions-of-overstating.html
February 18th, 2011 at 4:55 pm
Most readers look at NAR data for the trends — the ups and downs, the relationship between sales and median selling price, etc. The actual number is only meaningful in context with the metric’s history.
I would say this is only a real problem if the “data drift” they identify is a big factor– that is, if 2008 data is similarly biased as 2010 data, it’s fine to compare the two. Only if 2010 data’s bias is different from 2008′s should you get worried.
I think NAR recognizes this. They mentioned they are looking to re-calibrate every year. It is undoubtedly good for readers and consumers overall if CoreLogic can credibly challenge NAR’s data and potentially provide an alternative for media to quote. NAR gets all the press because they have the data coverage — by state, by county, etc. Let’s hope this forces NAR to get better data — and that CoreLogic might expand its free data offerings to smaller geographies.
February 22nd, 2011 at 11:45 am
[...] week, we discussed data that suggested the NAR has been dramatically overstating home sales and understating stating inventory. I have a much longer piece in the works, tracing how the [...]