Update, 12/15/11, Realtors have been doing things like counting contracts as sales, when everyone knows many contracts fall through. So it's not just 'methodology,' it's deception.
12/13/11, "Realtors: We Overcounted Home Sales for Five Years," Reuters, via CNBC
"Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.
The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.
"All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought," NAR spokesman Walter Malony told Reuters.
"We're capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list."
The benchmark revisions will be published next Wednesday and will not affect house prices.
Early this year, the Realtors group was accused of overcounting existing homes sales, with California-based real estate analysis firm CoreLogic claiming sales could have been
- overstated by as much as 20 percent.
At the time, the NAR said it was consulting with a range of experts to determine whether there was a drift in its monthly existing home sales data and that any drift would be "relatively minor."
The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.
Malony said the Realtors group had developed a new model that would allow frequent benchmarking instead of waiting 10 years for the population Census data to revise their figures."
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Realtors have been doing things like counting contracts as sales, when everyone knows many contracts fall through. So it's not just 'methodology,' it's deception.
12/15/11, "Even home-sales data is bogus, Realtors say," John Crudele, NY Post
"The National Association of Realtors admitted this week that it has been reporting bad figures on sales of previously occupied houses for the past five years. It will correct the mistakes next Wednesday, with everything reported since January 2007 revised downward.
This shouldn’t come as a surprise to readers of this column. I began telling you years ago that the sales figures on homes were wrong — and dangerously misleading.
For one thing, the Realtors seasonally adjust figures to such a degree they become disconnected from reality. Adjustments for the seasons are only valid if there is a regular yearly pattern in the economy — something that has been missing during this recession.
But most important — and this I mentioned in a column one year ago this week — the Realtors categorize contracts to buy a house as “sales.”
Everyone knows that contracts fall through, especially in this horrible economic environment. So just because someone signs on the dotted line to purchase a home
- doesn’t mean the sale will actually close.
The NAR, of course, would like home sales to look as brisk as possible. The group would like fence-sitting potential buyers to see its numbers and say, “heck, we better move fast before all the homes are gone.”
So, naturally, it counts people’s intention to buy a house as the real, completed deal.
Here’s the bigger problem.
The Realtors won’t even admit why their numbers have been wrong. In a preliminary warning this week, the group referred to an apparent statistical glitch whereby some houses were being counted twice. It also gave some nonsense about geographic population shifts and a decline in owners selling their own houses.
Jeez! Tell the truth — you were trying to make the numbers look better.
So, what’s wrong with that?
Well, a lot of things.
First, financial markets go up and down based on the health of the real estate market, which happens to be a very important industry in the US. So investors get cheated when official statistics like these are wrong.
But, more important, the Federal Reserve and Congress base their actions — or, lately, inactions — on leading economic indicators like house sales.
The folks in Washington are stupid enough even when they have correct information. The Realtors aren’t doing the country any favors by sugarcoating their stats.
And don’t think this was an oversight.
I, for one, have spoken with NAR several times about its policy to report house purchase contracts as final sales. And the folks at NAR didn’t seem bothered by the practice.
So, let me get back briefly to my pet idea now that we know the housing market is in even worse shape than we thought.
The rules need to be changed on retirement plans so that people can invest some of that tax-advantaged money in real estate."...
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