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Thursday, January 27, 2011

Update: Coming Existing Home Sales Revisions

by Calculated Risk on 1/27/2011 11:32:00 PM

• On February 23rd, the National Association of Realtors (NAR) will release revisions for the past three years (2008 through 2010) along with the January existing home sales report. This is the ordinary annual revision, and the revisions will probably be minor.

• The NAR is working on benchmarking existing home sales for previous years with other industry data. There is no planned release date for these possible revisions - if any are announced. The process is expected to be completed sometime after mid-year, and I expect this effort will lead to significant downward revisions to previously reported sales.

Original post:

This morning I noted:

I've been discussing the National Association of Realtors (NAR) existing home sales data with several analysts. ... I think the NAR started over estimating sales in 2006 or 2007 ... and the errors have increased since then ... I expect the NAR will revise down sales for these years in the not too distant future ...
The NAR is planning on releasing revisions for the past three years (2008 through 2010) on February 23rd along with the January existing home sales report. Many housing analysts expect these revisions to be significant - and to be down. Assuming the revisions are down, this will also reduce the "distressing gap" between existing and new home sales.

Distressing Gap Click on graph for larger image in new window.

Here is a repeat of the graph showing existing home sales (left axis) and new home sales (right axis) through December. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

After the housing bubble and bust, the "distressing gap" appeared due mostly to distressed sales. Even with a significant downward revision to existing home sales (say 10% or even 15%) that will only reduce the "distressing gap" a little.