Previewing NAR's Humiliating Multi-Year Existing Home Sales Downward Revision

Today at 10:00 am the National Advertiser [sic] of Realtors, aka the NAR, headed by chief advertiser Larry Yun, will share its latest mockery of "numbers" about the state of the existing home market. Concurrently it will also admit that as Zero Hedge has been asserting for years, those very numbers are a complete fabrication, and should be widely ignored by the broader analyst population, when it also releases an extensive downward revision of all home sales from 2007 to the present. Naturally, the revision will be a humiliation for all banks which built bullish theses on the housing sector based on this data, and most will have to re-revise their data even lower. As such, don't expect extensive post-facto analyses of what this revision means for future forecasts and readers will likely have to reach their own conclusions on the true state of the US housing market. The only good thing to come out of this revision is that, finally, the NAR monthly update will be relegated to the dustbin of economic indicators where it belongs. In the meantime, here is Goldman with an advance preview of what to expect.

10:00: Existing home sales (November): Downward revisions. We forecast that existing home sales rose by 1.0% (month-over-month) in November. The pending home sales index (a leading indicator) has picked up, which should imply moderate growth in existing home sales.


More interesting than the November result may be benchmark revisions to existing home sales scheduled for today’s report. The National Association of Realtors (NAR)—the group that compiles the existing home sales data—announced in a recent press release that existing home sales are likely to be revised down because the NAR has discovered “a notable upward drift in the data compared to other data measurements such as courthouse deeds records”. The bias appears to have resulted from a variety of factors: (1) sales of existing homes by property owners (i.e. without use of a realtor) declined during the housing recession, which caused the NAR’s realtor-based sample to increase as a share of total existing home sales; (2) a greater number of sales of new homes were mistakenly recorded as existing home sales; (3) some localities began reporting sales over a larger geographical area; and (4) some home sales may have been double counted in the underlying source data. According to the NAR, the revision will affect both sales and the number of homes on the market from 2007-present. The revision will not affect the “months supply” of homes or the report’s estimate of median sales prices


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