–2007 to 2010 Sales Benchmarked -14.3%
–Sees Beginning of Price Stabilization Next Year

By Denny Gulino and Ian McKendry

WASHINGTON (MNI) – U.S. sales of existing single-family homes, town
homes, condominiums and cooperatives rose 4.0% in November to an annual
rate of 4.42 million, a level made much lower by a wholesale rebasing
of sales data by the National Association of Realtors Wednesday — but
12.2% above a year earlier.

Because of the massive revisions of its sales numbers for the last
four years, lowering the level of sales overall 14.3%, the projection of
total 2011 sales, including the forthcoming December data, has gone to
4.25 million instead of the previous 4.9 million.

October’s initially reported change in sales was not revised,
though the levels were changed.

NAR Chief Economist Lawrence Yun told reporters he now sees next
year’s existing home sales to increase about 5% and for there to be “a
beginning of price stabilization.”

November sales were up in all four geographic regions and the level
of units for sale amounted to a 7-month supply at the current sales
pace, almost a five-year low. There were 2.58 million homes for sale in
November, the fifth month that inventory declined.

The national median home price, at $164,200 in November, was 3.5%
below a year earlier.

Yun said there was a slight uptick in first-time buyers in
November, from 34% to 35%, but that is still well below the typical
level in a healthy market. Lower price level homes still show all the
sales increases while higher-price homes show a sales decline.

The revisions to four years of sales data through 2010, which
lowered 2011’s base level as well, were the result of a drawn-out
process accompanied by much criticism of the NAR for its errors. The
parlous state of the housing market focused attention on the
overestimation, unlike in 2000, when the NAR benchmarked its levels
almost as much, 13% lower, without attracting any attention.

The steep downward revision in sales levels, however, had virtually
no significance for GDP estimates, which ignore past production such as
that of used homes, and made no difference to real estate firms, for
which the total of homes sold did not change.

The new numbers did reveal one surprise, Yun said, that Realtors’
market share of homes sold was actually better than realized previously.
It turns out that during bad times, homeowners turn more to Realtors to
move their property while in good times they more often sell the house
themselves — something not captured by the Realtors’ listing services.

The newly revised numbers showed that “if you look at the past four
years, with rebenchmarking, the annual sales levels have been in the low
fours,” Yun said. “One has to go back to 1996, when 4.16 million homes
were sold, to see such low sales,” and then, he added, the U.S.
population was lower by 50 million to 60 million in the mid ’90s, making
the housing market much smaller.

Yun explained that NAR’s sales numbers started to diverge markedly
from other sources, such as CoreLogic and LPS and even some government
figures, finally forcing the trade group to look for better source data
than the regional Multiple Listing Service which turned out to be
unreliable. Now the NAR is using a Census survey of households debuted
in the early part of the last decade and done annually since 2005. But
it covers only 1.3 million families and has to be extrapolated to get a
national estimate.

If other sources based on courthouse filing of deeds improves, Yun
said, the NAR will switch. Meanwhile, it will begin benchmarking
its data annually instead of every 10 years to minimize the errors.

The revisions also revealed that existing house price elasticity
was less than previously measured, Yun said, so that it takes more of a
sales decline to lower prices by a certain amount than thought.

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

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