Home Sales To Be Revised Downward – So What?

Late today the National Association of Realtors’ chief economist, Lawrence Yun, announced that on December 21 the results of their periodic rebenchmarking exercise will be announced and it will result is a “meaningful” downward revision in their estimates of existing home sales going all the way back to 2007. You can check out this explanation of how the NAR conducts their periodic rebenchmarking exercise for a better understanding of what is going on but the key here is that there was no intentional misrepresentation. It’s just a normal part of working with estimates and periodically recalibrating those estimates.
It sounds like the main problem with those national numbers has been that some of the data has been double counted from multiple MLS systems and also the percentage of for-sale-by-owner properties has declined over time, throwing off the estimates.
So things have been a bit worse at a national level than everyone thought. So what? Personally I don’t pay any attention to the national numbers anyway. I just focus on the Chicago area and we don’t use estimates in reporting those sales numbers. We get all our data from the MLS and the MLS has been fairly stable over time. It’s not like we’re looking at two different systems and potentially double counting. I guess the Chicago numbers might be off to the extent that the MLS excludes for-sale-by-owner properties and those sales have declined more than realtor sales. But I don’t think that’s a huge factor anyway – maybe those are like 10% of all home sales. And at the end of the day it’s the prices that really matter and the supply/demand dynamics, whether you are buying or selling. Actually, it’s the realtors that care more about transaction volume than their customers do because it affects their income.

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