In yet another setback for the already fragile housing market, the eternally optimistic National Association of Realtors announced Tuesday that it will revise existing home sales data lower in its next release scheduled for December 21.
Though we don’t know how big of a revision is in store, NAR chief economist Lawrence Yun said the decrease will be “meaningful.”
In other words, it’s gonna to be pretty bad, because as I mentioned, the NAR is an overly-optimistic group as it is.
So next week we’ll be seeing new sales numbers going back to 2007.
Why the Numbers Are Off
Yun noted that the MLS, or Multiple Listing Service, which real estate agents use to list properties for sale, has been double-counting sales.
Over the past several years, the MLS has been growing and reaching into previously untouched regions of the nation. As a result, home sales are appearing in more and more places.
Additionally, some of the geographic areas overlap, so a home that is listed in two different metropolitan areas may be counted twice if it sells.
The MLS also only lists homes for sale by agents, not by owner, and because most home sellers use real estate agents, the sales figures have been improperly inflated.
Finally, NAR has been relying on outdated 2000 Census data that has further skewed the numbers.
What It Means
Put simply, it means things have probably been a lot worse than they let on. Though Yun noted that the revisions won’t impact consumers because median home price data won’t be changed.
But clearly the data already has affected consumers, including those who bought homes because they thought things weren’t so bad, or on the road to recovery.
So to say it will have no effect is pretty bold to be sure.
Mortgage Rates to Remain Very Low in 2012
Meanwhile, those ultra-low mortgage rates we were all worried would rise in 2012 don’t appear to be going anywhere fast.
Freddie Mac released its December 2011 U.S. Economic and Housing Market Outlook today, with chief economist Frank Nothaft noting that, “next year will be another bumpy ride.”
By bumpy ride, he means no clear recovery and unemployment above eight percent. And with the questionable home sales data at issue, mortgage rates could be pressured even lower.
Either way, it is expected that mortgage rates will remain “very low” through at least mid-2012, so again no rush to go out and buy a home on that basis. It’s good news for refinancing though.
The only bright spot next year is expected to be the rental market as more homeowners become renters.