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Wednesday, December 21, 2011

Existing Home Sales Revisions

by Calculated Risk on 12/21/2011 11:30:00 AM

The NAR released the benchmark revisions today. From the NAR:

Also released today are benchmark revisions to historic existing-home sales. The 2010 benchmark shows there were 4,190,000 existing-home sales last year, a 14.6 percent revision from the previously projected 4,908,000 sales. For the total period of 2007 through 2010, sales and inventory were downwardly revised by 14.3 percent. The revisions are expected to have a minor impact on future revisions to Gross Domestic Product.
The impact on GDP is from a reduction in the estimate for Brokers' commissions on sale of structures. That reduction will be minor.

Here are a couple of graphs to illustrate the revisions:

Existing Home Sales Revisions Click on graph for larger image in graph gallery.

The first graph shows the revised sales rate (seasonally adjusted annual rate), and the pre-revision sales rate in blue.

The NAR has characterized this as "drift", but this shows a fairly sharp downward revision to 2007 data.

Existing Home Inventory RevisionsThe second graph shows the revision to inventory.

Inventory has been revised down sharply for years 2007 through 2011. As expected, with the downward revision, inventory is now at late 2005 levels.

The next graph shows inventory by month since 2004. In 2004 (black line), inventory was fairly flat and declined at the end of the year. In 2005 (dark blue line), inventory kept rising all year - and that was a clear sign that the housing bubble was ending.

Existing Home Inventory With the revisions, inventory in 2011 (dark red) is below the level of November 2005.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Of course this doesn't include "shadow inventory". In an earlier release this morning, CoreLogic estimated the shadow inventory as 1.6 million units.
CoreLogic ... reported today that the current residential shadow inventory as of October 2011 remained at 1.6 million units, representing a supply of 5 months.
Existing Home Sales NSAThe red columns are for 2011.

Existing Home Sales in November: 4.42 million SAAR, 7.0 months of supply
Existing Home Sales graphs