“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.
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.”
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.
Decline in real estate sales greater than stated?
CoreLogic: NAR methodology appears to inflate home sales by 15-20%
Inman News February 15, 2011