(Crossposted at Doom Network)
While many bubbleheads have known for some time that the housing market is doomed and is nowhere near a recovery, it seems the mainstream media is finally catching up. MSNBC reports:
Two high-profile reports on home sales this week confirmed that the housing market is still mired in a deep slump with prices still falling and sales activity sluggish at best. In fact, the market may be in much worse shape than even those numbers suggest.
Figures from the National Association of Realtors that are among the most closely watched indicators on the housing market have been called into question by economists who say they may overstate existing-home sales activity by up to 20 percent.
The report continues:
According to the NAR’s latest monthly data, the number of unsold homes in February represents an 8.6-month supply at the current sales pace, based on an annual sales rate of 4.88 million.
Those numbers would lead one to believe that the market is hunky-dory, with an ample, but not surplus supply of homes. As the laws of supply and demand suggest, a surplus of home inventory would drive down prices — a bad thing for home sellers, and by proxy, realtors. Therefore, it’s in the realtors’ best interest to have data reflecting a healthy market.
So, when CoreLogic released their own independent report saying the pace of home sales in February was actually 3.6 million units annually (not the 4.88 million reported by NAR), there’s some appropriate cause for concern. If CoreLogic’s numbers are right, that means there is a 17 month supply of homes, not a 8.6 month supply — that’s a huge difference!
“(Overstating the pace of homes sales) makes a big difference in terms of that month’s supply measure,” said Fleming. “That implies significant downward price pressure — which we’re actually observing. Prices are falling month over month — and year over year again — at a pretty significant pace at the moment.
The NAR is apparently placing the blame for the discrepancy on a lack of U.S. Census benchmarks.
In the case of NAR’s existing home sales report, the association polls about 40 percent of its members and logs sales based on the widely used Multiple Listing Service. Up until 2010, it periodically “benchmarked” its data based on the more complete count conducted by the U.S. Census.
Unfortunately, the Census dropped several key questions about housing in the 2010 Census, which left the NAR without that data set to recalibrate its own data series.
Since 40% of NAR’s members depend on MLS to generate sales figures, the actual annual home sales number might be even lower. Twist reported back in 2007 that several markets (Phoenix, Tucscon, and Las Vegas) were showing signs of inaccuracy in bookkeeping:
It appears to me that “adjustments” in MLS data may be indicative of errors in bookkeeping, and there may be an excessive dependence by consumers and Wall Street on the accuracy of this data.
It’s almost hilarious watching NAR continue grasping at straws while trying to maintain that everything’s fine when clearly that is not the case. How long did it take for them to actually admit there was a bubble?