National Association of Realtors Revises Previous Sales Numbers

Some of you may have noticed yesterday's mea culpa from the NAR in which they announced that home sales numbers were overstated for the past 4 years. In 2010, NAR's previous number of existing home sales of 4.91 million was lowered to 4.19 million. For the period 2007 to 2010, the downward revision altered figures for both sales and sales inventory by 14.3%. Oops.

Without getting into the statistical or methodological reasons for the errors, what does this mean to the average homeowner or potential homebuyer? And what does this tell us about the housing market today?

At the risk of stating the obvious, the housing market wasn't just really bad the last 4 years, it was really, really bad. Is that a surprise to anyone? So, what does that mean to today's housing market? It means nothing at all. You know the disclaimer you see on any prospectus that states that "past results do not predict future performance"? Yesterday's housing market is simply the backdrop to today's housing market. These numbers mean nothing to the person currently trying to sell their home, and nothing to the prospective family considering purchasing a home.

In a bit of good news, NAR announced yesterday that Existing Home Sales were up 4% in November, with the sales pace about 12% higher than a year ago. Lawrence Yun, NAR chief economist, noted "We've seen healthy gains in contract activity, so it looks like more people are realizing the great opportunities that exist in today's market for buyers with long term plans". The median price for existing homes of all types was $164,200, down 3.5% from a year ealier. Foreclosures and short sales accounted for 29% of sales in November, down from 33% in November 2010.

So, we have learned that the hill we've been rolling down since 2007 is 14% steeper than we thought it was. But that doesn't mean we've fallen further. We are where we are, and our homes are worth what they are worth. What I think we are all looking for is the bottom, and there are signs out there that the bottom may have already come and gone. Here's hoping that the next revision by the NAR a few years from now shows that home sales and values have been increasing faster than initially reported.