Re-benchmarking of Existing Home Sales. December 21, 2011

Transcription

1 Re-benchmarking of Existing Home Sales December 21, 2011

2 What is Getting Revised? No Revision to Median Home Price No Revision to Months Supply of Inventory Local MLS data converted to months supply Downward Revision to Home Sales Downward Revision to Inventory Inventory = months supply * sales Inventory = (Inventory/Sales) * Sales No Changes to Homeownership Rate No Changes to Local MLS data on Sales and Prices No Changes to Mortgage Default and Foreclosure No Changes to Underwater Status No Changes to Financial Statements of housing industry public companies.

3 Reported and Re-Benchmarked Annual Existing Home Sales Reported Annual EHS Re-Benchmarked EHS Revision ,652,000 5,040,000-11% ,913,000 4,110,000-16% ,156,000 4,340,000-16% ,908,000 4,190,000-15% 4-year Average 5,157,000 4,420,000-14%

4 Annual Figures Old and New In thousand units old new

5 Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Monthly Seasonally Adjusted Figures 8,000,000 7,000,000 6,000,000 5,000,000 Old and New 4,000,000 3,000,000 2,000,000 old new 1,000,000 0

6 Why Re-benchmark? All data should undergo a third party data validity check How many home sales if MLSs did not exist? What Data were used in prior Benchmarking? 2000 data using Decennial Census Long Form data, which resulted in 13% downward revision to home sales back in data using American Community Survey data resulted in 14% average downward revision

7 Why Revise from 2007? Noted Variation Between MLS Sales and Property Deeds Data One Example Below by Fannie Mae Research

8 Reasons for MLS sales count and Benchmark Divergence? Fewer FSBO home sales and more REALTOR -assisted home sales (e.g., no net increase in home sales in a case where 80 MLS sales and 20 FSBOs shifts to 90 MLS sales and 10 FSBOs) More Homebuilders seek REALTOR -assistance in listing properties on MLSs (More MLS count even though there is no increase in existing home sales) Flipping of a home (re-sell within 12 months) Re-benchmarked figure excludes the second sale, while they are counted as twice in MLS count Enlarged MLS geographic coverage Some of the home sales are not an increase in home sales but are just due to enlarged sampled areas Double counting as one single property is listed in two or more MLSs Example: a home in Colorado Springs is listed in MLS in Colorado Springs and is also listed in MLS in Denver.

9 Method of Home Purchase Real estate agent Homebuilder Directly from owner

10 What does revision mean for people? Consumers are not impacted Local MLS information matters for consumer decisions and there are no changes to MLS information Real Estate Companies financial statements are same as before For-Sale-By-Owner home sales fell drastically during the housing market downturn as more sought REALTOR assistance GDP component from home sales will be lowered from 2007 to 2010 (Department of Commerce needs to do this) The home price elasticity from home sales is lowered (that is, it took an even bigger decline in home sales to bring about the observed home price changes)

11 Future Plans MLS trend as the basis for Home Sales Trend will continue because it is most timely available data Re-Benchmark more frequently rather than waiting for data drift to accumulate over time Annual re-benchmarking and supplement using Courthouse Data 2 years of Census time-series data are needed to get one full year of benchmark. 2007, 2008, 2009 benchmarked figures are complete 2010 will be revised again next year Realtor Property Resource (RPR) Utilizing detailed property level data of both deeds records and MLS information as potential future source Exploring the Development of Repeat-Price Index using Timely MLS data The median price of sold homes is influenced by type of homes sold during the period and may not be a reflection of a general home price change

12 Other Data Issues MBA mortgage purchase applications Very useful gauge weekly, but huge swings and drift over long haul No information on approvals Census new home sales Not closings but contracts How many closings? Fallout rate? Are housing starts a better reflection of the new home market? HMDA data on mortgage approvals HMDA has no information on all-cash deals

13 < NAR Existing 1-Family Home Sales, United States SAAR, Units MBA: Volume Index: Mor tgage Loan Applications for Pur chase > SA, Mar-16-90= Sources: REALTOR, MBA /Haver 12/ 11/ 11 Note the figures in % changes going up from 1990 to mortgage purchase app up 400% - single-family EHS up 100% - single-family NHS up 200%

14 80% 70% 60% 50% HMDA share of Home Sales (Existing and new home sales, not housing starts) 40% 30% pre-ehs revised-ehs 20% 10% 0%