–Wells Fargo Economist: 2011 Sales May Be Revised 700k Lower

By Ian McKendry

WASHINGTON (MNI) The National Association of Realtors will revise
down their existing-home sales numbers Wednesday after rebenchmarking
the data all the way back to 2007. However, while the rebenchmarking is
expected to be substantial, economists will not be caught off guard.

“This is a good time to release the revisions, the seasonals are
more important than the sales data,” Mark Vitner, a senior economist
with Wells Fargo told Market News International.

Vitner said the issue with the NAR sales data is there was some
double counting, mostly related to short-sales. Vitner also said the NAR
has “spent a good amount of time to minimize that.”

The NAR announced last week that it would release the benchmark
revisions with the November existing-home sales report which is due at
10:00 a.m. Wednesday.

“An up-drift in sales projections developed over time between the
fixed model for calculating sales rates and the actual marketplace,
including growth in multiple listing service coverage areas, geographic
population shifts, a decline in for-sale-by-owner transactions, some
new-home sales trickling into MLS data and some individual sales being
recorded in more than one MLS. Divergence of the data with other housing
data metrics began in 2007, so revisions for 2007 through the present
will be released,” the NAR said in that announcement.

A survey of economists conducted by MNI centered on a forecast
5.05 million existing-home sales on a seasonally adjusted annual rate in
November.

However, the reported number come Wednesday is likely to be lower
than five million after the revision.

Vitner said he was unsure if his team was going to forecast
existing-home sales for November because if they accounted for the
downward revision it might send the wrong signal.

As far as the magnitude of the revision, Vitner said judging from
previous conversations with NAR chief economist Lawrence Yun, he expects
existing-home sales to be revised down about 700,000. “It’s not going to
be millions lower.”

In a research report earlier this year, data analytics firm
CoreLogic estimated that NAR’s existing-home sales data was overstated
by 15% to 20%.

“I’m not sure how much lower they are going to go, but it should be
fairly substantial I think,” Scott Brown, chief economist with Raymond
James told MNI referencing the revision.

He said he doubts the downward revision will be surprising beyond
what is already expected, adding “I think a lot of people were
suspicious of the numbers — that there may have been some multiple
counting.”

“We all know the housing sector is bouncing around the bottom,”
Brown added.

He also said that after discounting the rebenchmarking sales could
be better in November because of the large seasonal adjustment in the
winter months.

Vitner also said sales could be better after discounting the
revision because of seasonally warm weather.

“We may actually see a good size increase for the month,” Vitner
said.

** Market News International Washington Bureau: 202-371-2121 **

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