Home Sales Even Worse Than Reported Says the Primary Agency That Reports Them

Far fewer homes have been sold over the past five years than previously estimated, the National Association of Realtors said Tuesday.

That’s from a CNNMoney.com report by Blake Ellis.

While NAR hasn’t revealed exactly how big the revision to home sales will be, the agency’s chief economist Lawrence Yun said the decrease will be “meaningful.” …

Yun said the database NAR uses to track existing home sales, the Multiple Listing Service (MLS), has led the real estate agency to over-count existing home sales for several reasons.

The MLS database only includes home sales listed by realtors, and excludes homes listed by owners, providing a very narrow view of the market. And because more people are using realtors to list their homes instead of selling them independently, realtor-listed sales numbers have become artificially inflated, said Yun.

I cannot make sense of that last paragraph; can anyone else?

FWIW, back in 2007 we ran a Quorum on this blog asking the question “Is it time to believe in the housing bubble?” Lawrence Yun was one of the respondents:

We would advise your readers to visit the N.A.R. website to see our research on the housing market. All real estate is local, and there are many local variations.

As to the bubble, quite a number of local markets have not seen any price decline. The “correction” has been in home sales, mortgage lending, and new home construction, all of which are all down significantly. Some bad lenders have gone bankrupt, and aggressive hedge funds are hurting as a result — and I, for one, do not care. What I do monitor carefully is a factor that matters to consumers and homeowners: home prices. The national median price was 1.1% lower in the second quarter of 2007 than its comparable period the year before. That drop comes after a more than 50% rise in home values during the boom. If people want to call the 1% price decline a bubble collapse — well, everyone has an opinion. I believe that homeowners who are in it for the long term will do well. The Federal Reserve data show that the typical median wealth holding is $184,400 for homeowners, versus only $4,000 for renters. That, in my view, is quite compelling.



"typical median wealth holding is $184,400 for homeowners, versus only $4,000 for renters. That, in my view, is quite compelling."

My 'sample bias' and 'correlation vs. causation' alarms are a-ringing.


My guess is that the NAR use a 'gross-up' ratio to estimate total home sales (data they want) by using the home sales in MLS (the data they have). If more people are now using realtors to sell their homes and the NAR haven't adjusted their ratio, the gross-up procedure overstates the actual homes sold.


To clarify what Jay said, suppose NAR assumed that 90% of home sales use a realtor. Then they would take the number of sales reported by MLS and boost them by ~11% to get the real number of home sales. So 90,000 MLS sales means 100,000 total sales.

If they now believe that their estimate is wrong, and say 95% is the real number of sales going through MLS, they should adjust the sales by only ~5% instead. So the 90,000 MLS sales means ~95,000 actual sales.

Neil (SM)

I think that last paragraph is saying that if you put realtor and independent home sales inside a pie chart, the realtor slice recently got larger while the other one shrank.

But all that researchers saw when they looked over home sales figures was the realtor-sales number, which perhaps was an increasing value. This was incorrectly extrapolated to determine overall home sales without accounting for the concurrent decrease in independent-sales.


Why do people interview this Yun character or regurgitate his press releases?

He is not a expert, he is a PR mouthpiece designed to:

- say whatever it takes to make realtors look good
- lie about the state of the market
- make people believe "now is a great time to buy" and they must "buy now or get priced out forever"
- use whatever "statistics" he fabricates to support these points


As a realtor, and one who pays a lot to the national group, I have to wonder just what the "heck" is going on here. Over-counts and it has been going on for years? Nice to see dues are being put to good use...


All real estate is local, and there are many local variations.

That may be true but the prime factor that drives realestate prices is the cost of money, and that is global with no variations!


Wouldn't the availability of money for home purchases also be relevant? While banks can get money for nearly 0%, they are currently unwilling to lend it to homebuyers in almost every situation. This seems to an overcorrection to the bad lending practices of the past and it is driving prices down. In my opinion, when lenders start to open up again, prices will climb - not to previous levels, but certainly higher than they are today. I also expect that this will be more likely to happen if there are more lenders with access to capital, instead of a monopolistic few who prefer to make their money by playing insider games with their giant bank accounts.


For a realtor to admit they have been tweaking the truth - I mean it must be really bad.

Realtors are the last vestige of a bygone era that does not want to catch up to reality in hopes that the gravy train returns at some point. Well it wont


Peter. Schiff. Was. Right.


Why stop in 2007 for median house prices?


Just looking at July prices:

Jul 2007 $246,200
Jul 2008 $237,300
Jul 2009 $214,200

Bubbles don't have to collapse overnight... right?


At first I was shocked to see Freakonomics quote this real estate industry shill as an "economist." I hold him (and NAR as a whole) personally responsible for a good bit of the housing bubble. Thank you for calling them out on their BS.