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Did The NAR Lie About August Pending Home Sales?

Submitted by ilene on 10/05/2011 17:15 -0400

Courtesy of Lee Adler of the Wall Street Examiner

Data released today by the Mortgage Bankers Ass. suggest that housing demand is again cratering. In the last week of September mortgage purchase applications were down about 12% versus the same week last year. This is similar to the difference at the end of August, when the drop was about 13%.

Chart and data- Bloomberg

The data conflicts with the NAR's report that pending home sales (sales contracts) were up 13% percent year to year in August. One of these organizations must have it wrong. Cash sales haven't increased enough to make up for a 13% drop in mortgage applications.

Once again, there's a suggestion that there's something wrong with the NAR's data. The NAR has previously revealed that its pricing data could not be trusted. Apparently neither can its volume data. This conflict between the mortgage applications data and NAR data on sales contract volume only raises more questions about the NAR's objectivity and competence in reporting data in which the public has a critical interest.

In the meantime, I need to rethink my thesis that the housing market has at least stopped getting worse. If the latest data on mortgage applications is correct, then demand may again be falling off a ledge. The inventory to sales ratio which the NAR's data had shown to be improving would again be worsening. That would translate to another ratcheting down in price.

So far that's not showing up in the real time listing price data reported by Housingtracker.net. The trend of this index has tended to correlate well with subsequently reported transaction prices. Nationally, prices are flat over the past month, and down just 1% since the June peak. If the indications of weaker demand are correct, sellers should soon begin to reflect that in their asking prices.

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Pic credit: Neptune Salad

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Thu, 10/06/2011 - 09:35 | 1745094 PulauHantu29

No one wants a house anymore...taxes...maintenance....utilites...all soaring.

Thu, 10/06/2011 - 09:22 | 1744990 Waterfallsparkles

NAR is the National Association of Realtors. They get their data from the Multiple List data reported by all Realtors over the US.

The problem is again the Banks. They will not approve Home Loans unless you are absolutely perfect. Many try to Buy Homes but get turned down for the Loan by the Banks. The only loans that the Banks want to approve are the ones for Foreclosures just to get them off their books.

The other problem is that the Appraisal Process is also now being run by the Banks. So many Homes do not appraise. With an under Apprasial the Buyer has to come up with the cash difference between the purchase price and the Appraisal. So, if the Contract price is $100,000. and the Appraisal comes in at $90,000. The Buyer has to come up with an additional $10,000. The Buyer usually feels like they are then overpaying for the House and will walk away rather than put up the additional $10,000. The other way is for the Seller to reduce the price by the under Appraisal. Many times the Seller does not have that much equity to reduce the price. Plus, the Seller is reluctant to reduce the price after they already Sold the House for more Money.

Lots of problems. But, they all lead right back to the Banks.

In reference to the Mortgage Applications. Most of the Foreclosures are in such bad shape they have to be sold as Cash Only. No one would give a Loan on them. They have the pipes ripped out, the appliances have been taken, many times the kitchen cabinets are gone, the electricity has been turned off and the sump pump does not work and there is water in the Basement which can cause Mold thru out the House. Most of the Foreclosures are bought by Investors who are paying cash.

So, not suprising that they Sell without a Mortgage and for Cash.

Thu, 10/06/2011 - 08:30 | 1744818 Rockfish

Lie, there are no bigger liars than thoses in Finance and elective office.

Thu, 10/06/2011 - 05:17 | 1744536 ag3nt0rang3

Pending sales dont mean shit . Often investors will put out 10 or more lowball offers and more than one will be accepted or marked pending, The buyer then says that inspections were a no good and then then makes a lower offer or walks altogther. So for that one sale they get to report multiple pending sales .

Thu, 10/06/2011 - 05:18 | 1744534 Element

The data is real wacky alright ... even online the consumer data has gone apeshit

http://www.consumerindexes.com/commentary_2010_contraction_watch.png

http://www.consumerindexes.com/index.html

Thu, 10/06/2011 - 01:02 | 1744335 Quantum Nucleonics

They're real estate brokers, i.e. filthy dirt bags looking to score their next spif, of course they lie. In fact, you should assume everything a real estate broker says is a lie, then deducing the truth becomes relatively simple.

Thu, 10/06/2011 - 00:47 | 1744305 MIDTOWN

If you want accurate figures on actual sales then use recorded property transfers.

If you want to forcast the future sales, look to see how many realtors are renewing their license.

Thu, 10/06/2011 - 00:25 | 1744241 Prairie Fire

I'm farting blood

Thu, 10/06/2011 - 00:22 | 1744234 km457

Funny, this is in my wheelhouse. I crunch the numbers that go into NAR's stats in a big State. The numbers are reported by locals, basically at the County level, then compiled into State and finally into National numbers. There are a couple problems with the analysis above - the major one being that (at least where I am) yes, cash sales HAVE made up the difference and then some. Cash sales have doubled or even tripled consistently over previous years for most of the last 10 months. Traditional financing has fallen off a cliff, but cash buyers (read: speculators/foreign buyers) are indeed making up the shortfall.

August was something of an anomaly. It was weirdly, suprisingly up. I don't expect it to last, but, from where I sit, the data is essentially honest. A blip.

Thu, 10/06/2011 - 00:45 | 1744300 cynicalskeptic

Our future feudal lords and masters are accumulating estates where we will labor as serfs to out food in our stomachs and get protection...... a new Dark Ages will be following hthe collapse.

<snark>..... or not

Thu, 10/06/2011 - 08:30 | 1744812 LawsofPhysics

Snark all you want, but this exactly why my business in buying land and equipment. My people will most certainly be all too happy to help manage this transition.

Wed, 10/05/2011 - 23:33 | 1744120 geekgrrl

I just wish the housing market would go back to historical income/home price ratios so all this fantasy thinking regarding value could work out sooner.

I'm actually looking at a place to buy - a small farm/homestead, and was planning to put down 25%, finance for 15 yrs at like 4% and then pay it off in four or five years, since the mortgage is well below my income and I can pay it off early. Worst comes to worst, I have a small AU and AG stack and could dip into that. Even the fact that housing is overpriced right now is not my main concern. The main reason I don't want to take a mortgage is because it looks to me that a devaluation of some sort is coming. I was wondering if anyone knows how debt repayment works when a currency is revalued? Do you pay back the debt in new currency that is worth far less than the original currency or is the debt reduced by the ratio of the devaluation?

Wed, 10/05/2011 - 23:00 | 1744040 digalert

The NAR farce became clear to me in '09. The material they put out just didn't reflect the housing implosion happening. NAR, like CNBS, always trying to put lipstick on a pig.

Thu, 10/06/2011 - 00:29 | 1744253 MeetTozter

Why did you wait until 2009? They were buying the CNBC housing-prop by 2007.

http://www.mortgagenewsdaily.com/1122007_NAR_Advertising.asp

Wed, 10/05/2011 - 22:47 | 1744009 rocker

Try this: China's lowest PMI in 29 months hits 45.9 from a previous August 47.8

This is a verification of deteriorating conditions that confirm, China will Not carry America's lost consumer base.

Hmmmmmmmmmmmm.

Thu, 10/06/2011 - 08:31 | 1744822 LawsofPhysics

Nor will China carry America's paper, but the Fed's actions gave this away a long time ago.

Wed, 10/05/2011 - 22:23 | 1743969 PulauHantu29

"RE never goes down."

That's what my realtors told me.

Wed, 10/05/2011 - 20:53 | 1743756 CH1

Oh my God, a Realtor(TM) LIED??!!!

Not possible, they are Realtors(TM) after all!

Wed, 10/05/2011 - 21:58 | 1743929 daveedollar

I've been a realtor for a year and and a half after losing my job in construction. You'd be very hard pressed to find anyone who considers me a liar. And I am not collecting unemployment (even though I could have cashed in until SS eligibility kicked in). Have you lost a job and tried to make a living on commission?

Wed, 10/05/2011 - 22:25 | 1743976 hannah

devedollar - let me be the first....you are a liar! ....and a troll

Thu, 10/06/2011 - 07:48 | 1744719 stev3e

Hard hearted Hannah, the vamp of Savannah, the meanest gal in town.

Leather is tough but Hannah's heart is tougher - she's a gal that likes to see men suffer.

Wed, 10/05/2011 - 22:58 | 1744033 daveedollar

Harsh allegations, Hannah. Does that ring true? I speak only for myself, not NAR.

Wed, 10/05/2011 - 22:15 | 1743958 lincolnsteffens

It is just the usual trolls ready to bash an entire group of people. Doesn't matter if it is race, religion, economic class, banker, age, profession, you name the group, someone somewhere is debasing the character of a whole lotta people. I've done nearly a dozen real estate transactions over the years and most of the realtors have been fair and not misleading.

Thu, 10/06/2011 - 00:02 | 1744174 DeadFred

My experience is closer to 50:50. Half are reasonable, a quarter are slimes and a quarter act they are on drugs.

Wed, 10/05/2011 - 22:08 | 1743947 CrimsonAvenger

Hat's off to you for bouncing back. But here's the problem: to make those commissions, you have to tell people that it's a great time to buy, which is something NAR has said all the way up and all the way down the bubble. Truth is, it's a lousy time to buy. That's why people don't trust realtors.

Wed, 10/05/2011 - 22:55 | 1744027 daveedollar

4% interest rates are a fact. I only tell prospects that it is a great time to buy if they need a house. I have turned away several listings by telling the owners that it is a really bad time to sell. Realtors can be honest practicioners.

Thu, 10/06/2011 - 07:08 | 1744635 JuicedGamma

My friend, you will never make it in sales.

Thu, 10/06/2011 - 06:23 | 1744583 Miss Expectations

daveedollar, if prices are only going to go down from here, advising sellers to wait is going to cost them even more.

Wed, 10/05/2011 - 20:33 | 1743675 Lucius Corneliu...

The banks are still holding on to way too much inventory to even consider that we are close to a bottom.

Wed, 10/05/2011 - 20:26 | 1743635 beastie

I wonder do NAR include transactions where the bank shows up to the foreclosure auction and buy their own property? I have been to three in my town and in all three cases the banks have bought the property in essence to clean up the title. If so that may explain why their numbers are garbage. It would also double dip in the one case where the bank sold one of hte properties for 20K less than they paid for it the previous month.

Wed, 10/05/2011 - 20:06 | 1743550 sleepingbeauty

Is it possible that it is foreigners buying and getting any money in their home countries. I know that there is a guy in town that is on the radio all the time telling everyone that it is the time to buy in the states. That he can get you a mortgage in Canada and then you buy in the states. I know about 5 people that have bought in the states in the last month. They are generally buying 150K houses in Florida, Arizona or Georgia.

We cannot buy with the intent to make money on it, but you can buy a vacation home and then later decide to rent.

Wed, 10/05/2011 - 20:25 | 1743631 rpodraza

I'm in Phoenix and the realtors I know have been telling me inventories are falling (slightly) - primarily because of cash buyers. Many from Canada. Housing here is down 50% or more from 2007 so there are real bargains. Getting a mortgage is quite another matter.

Thu, 10/06/2011 - 00:02 | 1744179 CrazyCooter

I fscked up the first time I bought (although I may end up money good in the long run - I am not right now). The next time I buy, my criteria are (1) real local economy engaged in wealth production, (2) long term historic annual rain fall, (3) enough game/fish to feed the local population.

That put me in Alaska!

Best of luck living in the desert.

http://www.youtube.com/watch?v=VKNoJ2BzSRU

Regards,

Cooter

Thu, 10/06/2011 - 07:06 | 1744632 JuicedGamma

Alaska has no income or sales tax either.

Thu, 10/06/2011 - 09:02 | 1744955 falun bong

Yeah but you have to live in...Alaska

Wed, 10/05/2011 - 20:50 | 1743747 Seasmoke

more sheep being led to slaughter......those property taxes and association assesments are killers for those sitting ducks who pay cash

Wed, 10/05/2011 - 19:57 | 1743495 iNull

National Association of Idiots.

Wed, 10/05/2011 - 19:55 | 1743488 philipat

Straight out lying is a new venture for NAR. They normally content themselves with spinning the actual data, commonly quoted seasonally unadjusted MOM gains as the headline, instead of the more relevant YOY declines. I wouldn't believe a single word that this Organisation says.

Wed, 10/05/2011 - 19:53 | 1743483 mailll

We ARE in a recession, but the only ones who lead us to believe we are not in a recession are the ones who feed us those falsified govt. statistics. If they were honest when they release stats on jobs, GDP, etc., it would show that we are indeed in a very bad recession. When we have as many people out of work as we do, and as many people on public assistance as we do, and construction being at historic lows for the past few years, then common sense tells us that spending decreases drastically. How can we not be in a recession? It seems like the government is including China when they give us stats on GDP, unemployment, construction spending, etc. Because those rosy stats don't seem to apply for the US. It seems to be much worse. And I think most people would agree. When the govt. makes stats better than they really are, it takes the pressure off of them. They make things seem better than they actually are. I think we ARE in a recession and have been since April.

Wed, 10/05/2011 - 19:47 | 1743448 Seasmoke

does that count squatters who move into newly foreclosed empty homes

Wed, 10/05/2011 - 19:44 | 1743425 divide_by_zero

I always assume they're lying.

Wed, 10/05/2011 - 19:39 | 1743389 anony

Has Elvis left the building?

Did I not just save 15% on my car insurance?

Isn't Sofia Vergara, one very hot MILF?

Wed, 10/05/2011 - 19:58 | 1743507 mailll

I saved more than 15% on my auto insurance by switching to Geico years ago. And I just checked her out, and yes, Sofia Vergara is one very hot MILF. I just have to look up what a MILF is now.

Wed, 10/05/2011 - 19:33 | 1743373 chunga