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Tuesday, December 20, 2011

A comment on Existing Home Sales revisions

by Calculated Risk on 12/20/2011 02:55:00 PM

Tomorrow the National Association of Realtors (NAR) is scheduled to release the November Existing Home Sales report and downward revisions for sales and inventory for the years 2007 through 2011.

Economist Tom Lawler estimates the NAR will report a 1.8% increase in sales from October. He expects a downward revision of about 13%, so he expects the NAR to report sales of around 4.4 million at a seasonally adjusted annual rate (SAAR) in November. Consensus expectations are for 5.08 million sales (SAAR), but that is pre-revision.

It is possible that the downward revision will be even larger, but reported sales will probably be in the low to mid 4 million range.

However the key number in the report is inventory. Using data from, it appears that visible inventory (listed for sale) will be back to late 2005 levels. Nick Timiraos at the WSJ writes today: Already Low, Housing Inventory Drops More

The number of homes listed for sale in the U.S. fell for the sixth straight month in November to the lowest level since the housing bust began in 2006.

The 2.01 million homes listed for sale was down by 4.8% from October and by 21.3% from one year ago, according to data compiled by
Although there are many distressed sales still to come, this decline in visible inventory is a significant story.

Of course the headlines tomorrow will probably be about the significant downward revision to sales. Diana Olick at CNBC writes: Beware of the Big Bad Home Sales Revisions
Expectations are that home sales could be revised down anywhere from 10 percent to 20 percent. The Realtors’ chief economist said the revision would be, “meaningful.”
The Realtors’ revisions will change perception; they may even change consumer sentiment. Headlines will scream Wednesday morning, and reporters like me will jump in with the “breaking news” that far fewer existing homes sold over the past four years than previously thought.
The crash will look bigger. Will that change anything in the economy today? Will it affect the housing market going forward? ... My guess is no, but the revisions — and the hue and cry surrounding them — will hurt consumer confidence, which was beginning to come around ever so slightly.
Yes, there will be screaming headlines tomorrow, and probably accusations against the NAR, but that means reporters are missing the key story - the decline in visible inventory.

Housing Starts increase in November
Multi-family Starts and Completions, Record Low Total Completions in 2011