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NAR Revision Shows Home Sales Have Been Worse than Reported

The National Association of Realtors released a revision to its previously announced figures for existing US home sales over the last five years. Turns out there were an average of 14.3 percent less sales each year over that time. The new figures show that there were just 5.04 million previously owned homes sold in 2007, 11 percent less than originally reported. The revision for 2008 and 2009 were even larger, with the figures reduced by 16 percent. Last year's sales were revised down 15 percent.

According to the NAR's chief economist Lawrence Yun, the miscalculations began in 2007 and accumulated from there. The NAR's sales estimates are considered very important data and monitored closely by developers and policy makers, who base regulations on it. The fact that sales were actually much lower than previously thought did not come as a complete surprise as a number of real estate tracking firms had begun criticizing the NAR's reports. In February of this year, CoreLogic claimed that the group was overestimating the numbers by 15 to 20 percent.

The NAR doesn't actually count every sale but estimates them based on how any are reported by realtors. The method was remarkably accurate well into the middle 2000s, but the mistakes began at the onset of the housing bust as realtors got involved in a larger portion of sales and some MLSs expanded into new territories leading to some homes being counted twice. In November, the latest month revised under the newly implemented formula, sales came in at a seasonally adjusted annual pace of 4.42 million, 4 percent faster than October's pace and just over 12 percent higher than last November's sales.

January 25, 2012

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