The National Association of Realtors may have overestimated (by a million or so) the number of existing homes that sold since 2007, according to a piece in the WSJ.
Last year, NAR reported existing home sales volume of 4.9 million, down 5.7 percent from 5.2 million in 2009.
Meanwhile, real estate analytics firm CoreLogic tallied just 3.3 million sales, a drop of 10.8 percent compared to the 3.7 million recorded in 2009.
And CoreLogic believes NAR could have overstated numbers by more than 20 percent, though not intentionally (my conspiracy theorist friends).
How does NAR calculate existing home sales?
To calculate monthly changes in home sales, NAR uses a sample of multiple-listing service (MLS) sales data.
For annual sales, they use the U.S. Census data as a benchmark and make assumptions for population growth and other metrics.
A couple issues have been singled out so far, including recent consolidation of the MLS systems, and a shift in the share of for-sale by owner sales, which have dropped significantly since the housing crisis.
And because the latest census didn’t ask Americans about home sales, NAR will need to come up with a new formula to calculate sales volume.
Mortgage Bankers Association chief economist Jay Brinkmann said the group became skeptical of the NAR’s numbers after their index of purchase mortgage applications became a less reliable indicator of future home sales.
Brinkmann believes NAR could have overstated home sales by 10 to 15 percent, even factoring in a large share of all-cash transactions.
So what does it all mean?Well, if home sales are indeed much lower than stated, it’ll take that much longer to clear the inventory at the current sales pace, meaning home prices will be under pressure longer.