realtors admit they blew it, revised data coming 12-21

The National Association of realtors has a credibility problem. Everyone already distrusts them because the sales techniques they advocate rely on falsehood and manipulation to cajole buyers into closing deals. But their problems go deeper than that. The association provides market data which purportedly is objective, but it certainly appears as if they manipulate this data to make the market look stronger than it is. Is this an “honest” mistake?Mistaken_realtor

Back in February I noted that the National Association of realtors caught lying about home sales. I contended that “The NAr wanted to dupe buyers into thinking the market was stable to induce transactions that never would have gone through if buyers had known the truth.” Perhaps they were nefarious and just incompetent. Neither alternative speaks highly of them.

Published: Tuesday, 13 Dec 2011 | 5:21 PM ET

Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.

The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.”All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought,” NAR spokesman Walter Malony told Reuters.

Are they also retracting all their bullish — and completely erroneous —  statements over the last few years based on their incorrect data? Are they offering refunds to the buyers who believed their false data and relied on it to make a buying decision? What responsibility do they bear for the decisions they induced others to make?

“We’re capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list.”

The benchmark revisions will be published next Wednesday and will not affect house prices.Early this year, the Realtors group was accused of overcounting existing homes sales, with California-based real estate analysis firm CoreLogic claiming sales could have been overstated by as much as 20 percent.

At the time, the NAR said it was consulting with a range of experts to determine whether there was a drift in its monthly existing home sales data and that any drift would be “relatively minor.”

Relatively minor? They blew their counts by 10% to 20%, and they consider that relatively minor? They could have pulled numbers out of the air and done a better job.

The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.

Malony said the Realtors group had developed a new model that would allow frequent benchmarking instead of waiting 10 years for the population Census data to revise their figures.

I don’t care if they benchmark their data daily, they simply can’t be trusted to do it right. The temptation to fudge the numbers to pump the market is just too great.

Calculated Risk did a recent post on this issue, Lawler on NAR Revisions for 2007 through 2011.

From economist Tom Lawler: NAR to Release Existing Home Sales Revisions this Month

The National Association of Realtors yesterday sent out a media advisory [announcing] that it would release its benchmark revisions to its existing home sales estimates on December 21st. Here is what the NAR sent out:

Although there are downward revisions for total sales in recent years, there is little change to previously reported monthly comparisons or characterizations based on percentage change. There is a comparable downward revision to unsold inventory, so there is no change to relative month’s supply. Also, there is no change to median home prices.

An up-drift in sales projections developed over time between the fixed model for calculating sales rates and the actual marketplace, including growth in multiple listing service coverage areas, geographic population shifts, a decline in for-sale-by-owner transactions, some new-home sales trickling into MLS data and some individual sales being recorded in more than one MLS. Divergence of the data with other housing data metrics began in 2007, so revisions for 2007 through the present will be released.

Normal annual revisions will be released with January existing-home sales on February 22, 2012. Those revisions are expected to be minor and will fine-tune the data back though 2007.

While the NAR did not hint at the magnitude of the downward revisions, the “consensus” is that 2010 existing home sales will be revised downward by about 13% or so (yup, there’s a “consensus” for everything!). …

Many analysts were hoping that the NAR’s new methodology would be based on publicly recorded transactions, and apparently the NAR’s staff actually did explore this avenue. Rumor has it, however, that the new “benchmark” revisions will NOT be based on publicly recorded transactions – in part, apparently, because data coverage in many states is not comprehensive; data quality in many states/counties is poor; AND there are disparities among various private vendor estimates of sales based on publicly-recorded transactions. …

Any approach, however, will result in a material reduction in estimated sales over the last few years – though the result will still be estimates and not actuals.

CR Note: This was from economist Tom Lawler.

I don’t buy their argument that the data cannot be based on public information. They could use the data available and extrapolate from that. If their baseline is better, their estimates will improve. I don’t see how they could possible do worse; after all, they are off by more than 10% with their current methodology.