Existing-home sales maintained their upward trend for the third consecutive month in January, while foreclosures and increasingly tight lending standards continued to change the face of demographics, according to data released today by the National Association of Realtors (NAR).
However, the reliability of these numbers has been under increased scrutiny. The Wall Street Journal reported yesterday that the real estate analytics firm CoreLogic has called NAR’s data collection methods into question, suggesting that they may have overestimated existing-home sales numbers by as much as 20%.
Not surprisingly, the difference stems from how the different organizations collect data. While CoreLogic tracks property records through courthouses, according to The Wall Street Journal, NAR relies on sales numbers from local multiple listing services for monthly calculations. For annual numbers, NAR relies on the decennial U.S. Census reports, which involves making assumptions of population growth and other measures to cover the periods between surveys.
This has created a problem as some multiple listing firms have consolidated, expanding the areas they cover—which increased the numbers they reported—while NAR was unaware of the change. NAR’s estimates of “for sale by owner” home listings may also have been off. To complicate matters, the 2010 Census did not ask about home sales, which in turn requires NAR to revise its model.
The Mortgage Bankers Association (MBA) has also expressed doubt in NAR’s numbers, estimating that NAR has overstated sales by 10% to 15%, based on MBA's index of mortgage-purchase applications.
“If they are off by this much, this consistently, it would be sending the wrong signal to the market,” Jay Brinkmann, chief economist at the MBA, told The Wall Street Journal.
Lawrence Yun, chief economist at NAR, has insisted that the organization is looking into the possible data problems and that the data may be revised downward this summer.
Meanwhile, the association reported statistics for January today, which painted a positive view of sales, even if home price numbers (a statistic on which NAR is not being questioned) looked increasingly dreary.
Nationwide, existing-home sales—a number that includes completed transactions of single-family homes, townhomes, condos, and co-ops—rose 2.7% in January, according to NAR, to achieve a seasonally adjusted annual rate of 5.36 million, an improvement of 5.3% from January 2010.
Sales of distressed homes continue to hold an enormous share of the market, reaching 37% in January, up 1% from December and down 1% from January 2010. The glut of foreclosures helped push the median price for existing homes down to $158,800, a 3.7% drop from January 2010’s $164,900 and down from December’s median home price of $168,800.
As credit has tightened, all-cash transactions have grown, reaching 32% of purchases in January, the highest level seen since NAR started collecting monthly data in October 2008, at which point all-cash purchases accounted for only 15% of transactions. All-cash deals have been rising steadily, averaging 20% of existing-home sales for 2009 and 28% last year.
Tighter credit and the flood of foreclosures have also driven investors into the game in greater numbers. Investors fueled 23% of purchases in January, a 3% increase from the previous month and a 6% increase year-over-year.
Meanwhile, first-time buyers declined to 29% of the market for the month, compared to 33% in December and 40% in January—a phenomenon of the tax credit.
Existing single-family sales saw an increase of 2.4%, while condo and co-op sales rose 4.7%.
On a regional basis, sales numbers for January were up everywhere except the Northeast, while median sales prices dropped across the board, compared to year-ago levels.
The Midwest saw a rise of 1.8% to a level of 1.14 million, a 3.6% increase year-over-year. The median existing-home price was $126,300 for the month, a 3.2% decline from January 2010.
The South was up 3.6% for the month to an annual rate of 2.02 million, an 8.0% increase from the previous year. There, the median price dropped 2.1% from the previous year to $136,600.
And the West was up 7.9% to reach an annual level of 1.37 million, a 7.0% increase compared to January 2010. The median price dropped 5.7% compared to a year ago, reaching $193,200.
Sales in the Northeast dropped 4.6% in January to a pace of 830,000, 1.2% lower than the year before. It reached a median price of $236,500, a 4% drop on an annual basis.
The increased sales numbers helped bring down housing inventory, which fell 5.1% to 3.38 million homes, or a 7.6-month supply given the current pace, according to NAR’s statistics.
Claire Easley is senior editor, online, at Builder.