In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Friday, December 16, 2011

Lawler: Early Read on Existing Home Sales: Given the Benchmark Revision, a “Challenge”

by Calculated Risk on 12/16/2011 04:11:00 PM

CR Note: The NAR is scheduled to release November existing home sales on Wednesday, December 21st at 10:00 AM ET. The NAR will also release the benchmark downward revisions for 2007 through 2011 next Wednesday.

From economist Tom Lawler:

Based on my tracking of regional realtor/MLS reports, I estimate that existing home sales in November as measured by the National Association of Realtors ran at a seasonally adjusted annual rate that was about 1.8% higher than October’s pace, and about 9% higher than last November’s pace.

What that will mean for the NAR’s estimated sales number, however, is not clear, as the NAR announced that it is releasing updated (and lower) existing home sales estimates from 2007 to 2011. While I do NOT know what the revised sales estimates will be, based on various data sources I estimate that the NAR’s estimate of existing home sales for 2010 will be revised down by about 13% or so. As best as I can tell, 2011 sales data will be revised down by about the same amount as 2010 sales data.

As a result, I estimate that the NAR’s estimate for existing home sales for November will be a seasonally adjusted annual rate of around 4.40 million. If no benchmarking were done, I estimate the NAR’s existing home sales estimate would be a SAAR of around 5.06 million for November.

On the inventory side, the NAR said that its “months’ supply” measure will not be revised, implying that inventories will be revised down by the same percentage as sales. Various sources indicate that aggregate active listings fell considerably from October to November, with my tracking suggesting a monthly drop of about 5% -- though NAR inventory numbers don’t always “track” listings data. But if that drop were to happen, I’d estimate that the NAR will report an existing home inventory of about 2.753 million, down about 14.9% from last November.

The NAR has also said that it would not revise its median sales price data. Based on my tracking – which has an at best “so-so” track record in predicting the NAR number – I estimate that the median existing home sales price for November will be down about 4.2% from last November.

CR Note: Tom's estimate for inventory includes adjusting for the benchmark downward revision. This would put months-of-supply at around 7.5 months, and would put listed inventory at the lowest level since mid-2005.