NAR Revises Housing Figures: What This Really Means

December 22, 2011

Home sales activity from 2007 through 2010 was lower than originally thought, with sales and inventory down by 14 percent more than originally reported, according to recently revised housing figures by the National Association of REALTORS®.

The revisions were made to NAR sales and inventory data since 2007. NAR notes, however, that the revisions did not change the month-to-month characterization of market conditions, nor were any changes made to reported home prices or month’s supply. 

That’s important note, because this change doesn’t really affect “anything happening today in the economy, current home sales and prices, and already-accounted-for losses from the housing crash,” wrote Diana Olick, a CNBC real estate reporter. 

“From a consumer’s perspective, only the local market information matters and there are no changes to local multiple listing service data or local supply-and-demand balance, or to local home prices,” NAR’s Chief Economist Lawrence Yun, said in a statement

Why the Numbers Were Off

The new figures were released this week after NAR reviewed and revised its methodology, after noticing a shift between how sales are reported by multiple listing services and how sales are determined by a U.S. Census benchmark beginning in 2007. The shift occurred, according to NAR, due to growth in MLS coverage areas where sales data is collected, geographic population shifts, and double counting due to the same properties appearing on several different MLSs. A big part of the divergence in the data was also caused by fewer For Sale by Owner sales.

“It appears that about half of the revisions result solely from a decline in for-sale-by-owners, with more sellers turning to REALTORS® to market their homes when the market softened,” Yun said. “The FSBO market was overwhelmed during the housing downturn, and since most FSBOs are not reported in MLSs, national estimates of existing-home sales began to diverge based on previous assumptions.” For example, in 2000, according to NAR, FSBOs accounted for 16 percent of the market share, but that number fell to 9 percent in 2010.

‘Don’t Be Spooked’ by New Numbers

The housing data revisions have been widely reported among the media, and some are concerned that home buyers and sellers may get spooked by the new data, showing the housing crisis was worse than previously thought. But the revisions need to be kept in perspective, housing experts say.

“There are still considerable headwinds facing housing’s recovery, not the least of which are foreclosures, and potential buyers have to factor that into their decision making,” CNBC’s Olick wrotes in another recent article. “They should not, however, be spooked by nasty new numbers that really just put an exclamation point on what we already knew … that housing went from an unprecedented boom to an unprecedented bust and took down our economy with it.”

Sources: “Home-Sales Revisions to Hurt: More Distress in Market,” CNBC (Dec. 21, 2011) and the National Association of REALTORS®