New benchmarking standard will include revision of historical numbers

By Inman News, Monday, November 14, 2011.

Inman News™

The National Association of Realtors says it has overestimated the number of homes sold in recent years and will soon publish revised statistics based on a new benchmarking methodology.

The revisions will show fewer homes were sold than NAR previously estimated, but that there will be little change in previously reported ups and downs in home sales on a percentage basis. There will also be no change to median prices or months’ supply of inventory, NAR said in releasing its 2012 housing forecast.

Potential problems with NAR’s benchmarking methodology were first reported by the blog Calculated Risk in January, and further detailed in a report by analysts with CoreLogic that concluded NAR may have overstated home sales by 15 to 20 percent.

According to the Wall Street Journal, NAR discussed the issue as long ago as December 2010 with economists from the Mortgage Bankers Association, Fannie Mae, Freddie Mac, the Federal Reserve, the Federal Housing Finance Agency and CoreLogic.

In February, NAR said it collects sales data from multiple listing services that handle about 40 percent of sales. In the past, NAR has benchmarked sales data against Census data, which it last updated in 2000. When NAR last benchmarked its data in 2000, it found it had underestimated sales by 13 percent, and revised 1990s data accordingly.

Now NAR says that because home sales data is no longer included in the Census, it has developed a new benchmarking approach “using an independent source to improve methodology and to permit more frequent revisions.”

Preliminary data for the new benchmark will undergo broad review by professional economists and government agencies, with revisions published “after any issues that may surface in the review process are addressed,” NAR said Friday.

Based on the existing model, NAR expects existing-home sales will total about 4.96 million this year, and grow by 4 percent to 5 percent in 2012. NAR expects new-home sales to soar by 23 percent next year from this year’s record low of 302,000.

In an Oct. 17 forecast, economists with Fannie Mae said they expect sales of existing homes will total 4.93 million this year, with more modest 0.6 percent growth in 2012. Fannie Mae economists expect new-home sales to grow by 4.9 percent next year, from a projected total of 306,000 sales in 2011.