NAr pending home sales data is worthless and misleading
NAr revises previously reported data by 25% to 30% but claims their analysis based on faulty data was still good. They have no shame.
I write a monthly housing market report each month, so I understand the need to provide timely and accurate data and reporting. It’s a big task, and it requires attention to detail, but beyond that, reporting data accurately requires the desire to do so, something the NAr completely lacks.
The National Association of realtors is dedicated to advancing the interests of listing agents who dominate the organization. Their primary focus is to generate real estate sales and commissions that provide income for its members. realtors don’t care if the data their organization publishes is accurate; their concern is how data can be conveyed in a way that generates urgency to buy a house.
Back in early 2011, I reported the National Association of realtors caught lying about home sales. Later, Reuter’s reported Existing home sales to be revised down from 2007, and ZeroHedge noted US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports. The NAr would like everyone to believe these were “honest” mistakes.
Did the NAr intended to provide accurate data but merely made a small mistake? I don’t think so. I believe this corrupt trade organization displays a deeply pathological flaw that renders it incapable of telling the truth. I exposed that problem in The real reason the NAr affordability index is completely worthless.
realtors want to pass themselves off as experts on real estate whose advice can be relied upon by market participants. However, realtors have no interest in whether or not it truly is a good time to buy or sell because for them, it’s always a good time to generate a commission. This conflict of interest causes realtors to be self-serving liars who line their own pockets at the expense of the people they ostensibly serve.
I detailed this phenomenon in the 2010 post Urgency Versus Reality: realtors Win, Buyers Lose.
realtor Mind ®™
I recently attended a realtor marketing seminar, and it was fascinating to watch the realtor mind at work. The presentation included many “reasons to buy” realtors could use in their own
consultationsmanipulations with customers. There was little or no regard for the veracity of the claims, it only mattered that realtors have something, anything to create urgency in buyers.
Many realtors see their job as presenting buyers with reasons to buy, any reason, and hope the buyer is gullible enough to believe them. They feel no responsibility for buyer outcomes; whocouldanode, right? What other explanation is there?
realtor Mind is Everywhere
How widespread is realtor mind? Am I unfairly labeling a large group based on a few isolated incidents among unscrupulous practitioners?
Back at the peak of the housing bubble, the National Association of realtors produced the “Suzanne Researched This” commercial. The scene is set with a couple discussing a home purchase in their kitchen with a realtor voyeuristically listening on the phone. In stereotypical fashion the commercial shows women how to browbeat their spineless husbands into submission, and it shows men how to acquiesce gracefully and pretend you got something out of the deal.
This self-serving need bleeds into decisions both big and small at every level of their organization. It renders them incapable of telling the truth, and worse than that, their pathology makes them indifferent to the truth. To them, data is only a useful tool if it can be made to serve their purposes, mostly manipulating buyers into action whether it’s good for them or not.
by Bill McBride on 2/27/2015
From housing economist Tom Lawler:
… There were significant revisions in historical data – not just seasonally adjusted data but unadjusted data – with all of the unadjusted revisions coming in the West region. … the NAR’s Pending Home Sales Index for the West had previously made no sense either in terms of the pattern of pending sales vs. closed sales in that region, or in terms of pending sales reports from realtors/MLS in the region. … the PHSI for the West was revised massively in today’s report …
The magnitude of these errors is astonishing, ranging from -24.4% to +31.5%.
Most reports this year show declining home sales, both resale and new, and declining purchase mortgage originations, yet the NAr is telling us the pending home sales index is rising for the fifth month in a row — and reporters are dutifully spinning the data as if the housing market is strong.
National Association of realtors index points to firming demand
By Ben Leubsdorf, Updated Feb. 27, 2015
WASHINGTON—A forward-looking gauge of U.S. home purchases rose in January to its highest level in nearly a year and a half, a sign of firming demand in the housing market.
Better buy now or be priced out forever, right?
“Through the volatility, the trend in home sales is up probably up modestly at least,” High Frequency Economics chief U.S. economist Jim O’Sullivan said in a note to clients.
That’s something to base a buying decision on, isn’t it?
“All indications point to modest sales gains as we head into the spring buying season,” Mr. Yun said.
I don’t see any such indications; in fact, we all know there are no such indications but Lawrence Yun is hired to say there are anyway.
The U.S. housing market entered 2015 on uncertain footing after a generally lackluster 2014.Sales of previously owned homes, which make up about 90% of the U.S. market, fell roughly 3% in 2014 from the prior year. In January, existing-home sales declined 4.9% from the prior month to their slowest pace since last spring, the NAR said Monday. …
Signs of a robust recovery… not.
Home-building activity dipped in January. Housing starts fell a seasonally adjusted 2% from the prior month, and single-family housing starts declined 6.7% from December, according to Commerce Department data.
More signs of strength… not.
Mortgage rates remain low but have ticked up in recent weeks. The average interest rate on a 30-year fixed-rate mortgage was 3.80%, Freddie Mac said Thursday, up from 3.67% last month but down from 4.30% in February 2014.
Purchase originations remain near record lows despite low rates.
And despite all these reports, we get this from the NAr:
According to Friday’s report, pending sales of existing homes rose 3.2% in the South last month from December, and climbed 2.2% in the West. Pending sales ticked up 0.1% in the Northeast and fell 0.7% in the Midwest.
Seriously, do you believe a word of it?
The National Association of Realtors on Friday also released seasonal-adjustment revisions for pending home sales data from 2012 through 2014, and revised data for the West region going back to 2001. “Most revisions are minor with no impact on previous characterizations of the overall market based on the headline seasonally adjusted index,” the trade group said in a statement.
Most revisions are minor? I don’t consider changes of 25% to 30% minor, do you? And it infuriates me that they have the temerity to state these revisions have no impact on the spin they offered previously.
Actually, when I reflect more deeply on it, perhaps they are right. Since they have absolutely no credibility, their revisions have no impact because nobody believed them when the data was originally reported. Their market characterizations (spin) have no basis in reality, so it’s probably an accurate statement that the revisions have no impact — they would have made up some ridiculous bullshit either way.