NAR to Revise Existing Home Sales Data - Five Whole Years Worth

The National Association of Realtors® (NAR) will hold a press conference next week to announce revisions to its data on sales of previously owned U.S. homes from 2007 through October 2011.  NAR's initial press release yesterday made this sound like a routine tweaking of numbers, i.e., "The National Association of Realtors® will release benchmark revisions to existing-home sales", and, "Although there are downward revisions for total sales in recent years, there is little change to previously reported monthly comparisons or characterizations based on percentage change.  There is a comparable downward revision to unsold inventory, so there is no change to relative month's supply.  Also, there is no change to median home prices."

However, a subsequent statement from the association that begins with the statement, "NAR takes its role as a leading source for housing information very seriously" and rumors running through the industry indicate the situation may be more serious and potentially much more embarrassing to the trade group.

Reuters is reporting that the downward revision of the multi-year accumulation of sales information is the result of double counting and will indicate a much weaker housing market than previously thought.  NAR said that a benchmarking exercise had revealed that some properties were listed more than once and some new home sales may have been included in existing home sales figures.

NAR said, "All major statistical data series go through periodic reviews and revisions to ensure that sampling and methodology keep up with changes in the market. Factors like population changes in sampled areas, growth in MLS coverage areas, declines in for-sale-by-owner transactions, and some individual sales being recorded in more than one MLS have contributed to an updrift in EHS data over the past few years, and this rebenchmarking will ensure more accurate and reliable information."

Chicago Agent Magazine said that the blog Calculated Risk first uncovered the overstated sales figures in January and "each release of existing-home sales data has been greeted with increasing skepticism.  NAR finally did admit in November that it had been exaggerating with its statistics."

The magazine faulted NAR for the extended lifespan of its data.  Although the initial overstatements in 2006 and 2007 may have been tiny, "five full years of inaccurate data have progressively added to the margin of error" and now it may need to be adjusted downward by 15.1 percent.  CoreLogic, earlier this year, criticized the data and said it might be off by as much as 20 percent.

Chicago Agent said that, ironically, the last time that NAR revised its data was in 2000, when it found that it had underestimated sales data by 13 percent for the 1990s.

NAR will release the revised data at a press conference on December 21 at the same time it releases November sales numbers.