NAR conceded that there may be an "upward drift" in their figures since the housing market collapsed a few years ago. Some economists believe the datat could be inflated by as much as 20%. But, Walter Malony, an NAR spokesman says the data is still accurate and that "In terms of broad market characterizations, it's really not that big of a deal,". REALLY?
The latest absorbtion rate figures released by NAR show that the maket has 8.6 months of inventory nationally. This figure assumes an annual sales rate of 4.88 million homes. Most industry experts agree that a balanced buyer/seller market is attained when there are 6-8 months of inventory available. More inventory would sway in the buyers favor, less would favor a seller. CoreLogic, a private research firm that tracks county real estate records across the country, says the annual sales rate is much closer to 3.6 million homes. That would put the supply numbers in the 17 month range. Obviously that's a significant difference.
So, who's right? If the NAR numbers are off as far as some parties think, then the recovery is definitely at risk. The inflated figures could repress home values further by providing an unrealistic market value for recent sales and could push prices lower still.
NAR's figures, like most economic models, are based on data samples. Getting a more fine-tuned number would require several extra months of research and would not allow for timely releases of reporting. The "Existing Home Sales Report, only polls about 4 out 10 members nationally and compares that to national MLS figures. There was a "benchmark" factor based on Census data that is now defunct due to the removal of several housing-related questions from the most recent count.
One factor in particular, not included in NAR's model, stands to skew figures in and of itself. There is no correction made for a brokerage that has taken on smaller firms or competitors during the downturn. Just because their numbers rose, doesn't necessarily mean there were more sales in that market, just that the brokerage significantly expanded their sales forces.
Let's hope they get this sorted out sooner rather than later. The reporting they are responsible for is watched closely across a broad range of industries.