Re-Benchmarking Home Sales Figures

7/29/2019 Re-Benchmarking Home Sales Figures

1/14

Re-benchmarking of Existing

Home Sales

December 21, 2011


2/14

What is Getting Revised?

No Revision to Median Home Price No Revision to Months Supply of Inventory

Local MLS data converted to months supply

Downward Revision to Home Sales

Downward Revision to Inventory Inventory = months supply * sales

Inventory = (Inventory/Sales) * Sales

No Changes to Homeownership Rate

No Changes to Local MLS data on Sales and Prices

No Changes to Mortgage Default and Foreclosure

No Changes to Underwater Status

No Changes to Financial Statements of housing industry publiccompanies.


3/14

Reported and Re-Benchmarked Annual Existing

Home Sales

Reported

Annual EHS

Re-Benchmarked

EHS Revision

2007 5,652,000 5,040,000 -11%

2008 4,913,000 4,110,000 -16%

2009 5,156,000 4,340,000 -16%

2010 4,908,000 4,190,000 -15%

4-year

Average 5,157,000 4,420,000 -14%


4/14

Annual Figures Old and New

0

1000

2000

3000

4000

5000

6000

7000

8000

old

new

In thousand units


5/14

Monthly Seasonally Adjusted Figures

Old and New

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2005-Jan

2

005-May

2005-Sep

2006-Jan

2

006-May

2006-Sep

2007-Jan

2

007-May

2007-Sep

2008-Jan

2

008-May

2008-Sep

2009-Jan

2

009-May

2009-Sep

2010-Jan

2

010-May

2010-Sep

2011-Jan

2

011-May

2011-Sep

old

new


6/14

Why Re-benchmark?

All data should undergo a third party datavalidity check How many home sales if MLSs did not exist?

What Data were used in priorBenchmarking? 2000 data using Decennial Census Long Form

data, which resulted in 13% downward revision

to home sales back in 2000 2007-10 data using American Community Survey

data resulted in 14% average downward revision


7/14

Why Revise from 2007?Noted Variation Between MLS Sales and Property Deeds Data

One Example Below by Fannie Mae Research


8/14

Reasons for MLS sales count and

Benchmark Divergence? Fewer FSBO home sales and more REALTOR-assisted home sales (e.g., no

net increase in home sales in a case where 80 MLS sales and 20 FSBOsshifts to 90 MLS sales and 10 FSBOs)

More Homebuilders seek REALTOR-assistance in listing properties on

MLSs (More MLS count even though there is no increase in existing home

sales)

Flipping of a home (re-sell within 12 months)

Re-benchmarked figure excludes the second sale, while they are

counted as twice in MLS count

Enlarged MLS geographic coverage

Some of the home sales are not an increase in home sales but are justdue to enlarged sampled areas

Double counting as one single property is listed in two or more MLSs

Example: a home in Colorado Springs is listed in MLS in Colorado

Springs and is also listed in MLS in Denver.


9/14

Method of Home Purchase

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011

Real estate agent Homebuilder Directly from owner


10/14

What does revision mean for people?

Consumers are not impacted Local MLS information matters for consumer decisions and

there are no changes to MLS information

Real Estate Companies financial statements are same asbefore

For-Sale-By-Owner home sales fell drastically during thehousing market downturn as more sought REALTORassistance

GDP component from home sales will be lowered from

2007 to 2010 (Department of Commerce needs to do this) The home price elasticity from home sales is lowered (that

is, it took an even bigger decline in home sales to bringabout the observed home price changes)


11/14

Future Plans

MLS trend as the basis for Home Sales Trend will continue becauseit is most timely available data

Re-Benchmark more frequently rather than waiting for data driftto accumulate over time Annual re-benchmarking and supplement using Courthouse Data

2 years of Census time-series data are needed to get one full yearof benchmark. 2007, 2008, 2009 benchmarked figures are complete

2010 will be revised again next year

Realtor Property Resource (RPR) Utilizing detailed property level data of both deeds records and MLS

information as potential future source Exploring the Development of Repeat-Price Index using Timely

MLS data The median price of sold homes is influenced by type of homes sold

during the period and may not be a reflection of a general homeprice change


12/14

Other Data Issues

MBA mortgage purchase applications Very useful gauge weekly, but huge swings and drift

over long haul

No information on approvals

Census new home sales Not closings but contracts

How many closings? Fallout rate?

Are housing starts a better reflection of the new home

market?

HMDA data on mortgage approvals HMDA has no information on all-cash deals


13/14

< NAR Existing 1-Family Home Sales, United StatesSAAR, Units

MBA: Volume Index: Mortgage Loan Applications for Purchase >SA, Mar-16-90=100

1005009590

Sources: REALTOR, MBA /Haver 12/11/11

6750000

6000000

5250000

4500000

3750000

3000000

2250000

600

500

400

300

200

100

0

Note the figures in % changes going up from 1990 to 2005

- mortgage purchase app up 400%

- single-family EHS up 100%

- single-family NHS up 200%


14/14

HMDA share of Home Sales(Existing and new home sales, not housing starts)

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005 2006 2007 2008 2009 2010

pre-EHS

revised-EHS

Documents

Re-Benchmarking Home Sales Figures