Moderate Growth in Existing Home Sales in November ….. Benchmark Revisions Released


Existing home sales continued to grow at a moderate rate on a month-to-month basis in November and also improved upon their year ago level. The National Association of Realtors (NAR) reported sales of existing homes, completed transactions of single-family, townhomes, condominiums and co-ops rose 4.0% in November to a seasonally adjusted annual rate of 4.42 million. This follows a modest increase of 1.4% in October, and a decline of 3.0% in September. On a year-over-year basis, existing home sales are 12.2% higher than the 3.94 million unit level in November 2010.

Single-family home sales increased 4.5% to a seasonally adjusted annual rate of 3.95 million units and were 12.9% above the 3.50 million-unit level in November 2010. Condominium and co-op sales remained unchanged at 470,000 units and are 6.8% higher than their year-ago pace of 440,000 units. Gains were observed across all regions, with the Northeast jumping 9.8% to an annual pace of 560,000 units, the Midwest rising 4.3% to 960,000 units, the West up 3.6% to 1.16 million units and the South increasing 2.4% to 1.74 million units.

The housing inventory at the end of November fell 5.8% to 2.58 million existing homes for sale. At the current sales level, this represents a 7.0-months supply, down from 7.7-months supply in October. The investor share of sales inched back up to 19% (from 18% in October) and the share of first-home buyers also ticked higher to 35% (from 34% last month).

Contract failures, which have been elevated in recent months, remained high in November with 33% of NAR members reporting cancellations caused by declined mortgage applications and failures in loan underwriting from the appraised value coming in below the negotiated price. The cancellation rate is considerably higher than a year ago when it was 9%.


After months of anticipation, the NAR released the benchmark revisions to the existing home sales data. This follows concerns raised earlier this year that the NAR’s existing home sales data was showing much stronger gains in the second half of 2010 than other comparable data. The NAR subsequently reviewed their sampling and methodology used for the existing home sales survey. The new benchmark estimates are based on the one-year estimates of the American Community Survey (ACS) from the Census Bureau. Previously the decennial Census data was used as the benchmark. The month-to-month changes will continue to be based on the shift in sales of a 40% sample of the Realtors® multiple listing service (MLS) data.

The benchmark revisions extend back to 2007 and result in an average downward adjustment to sales and inventory data of approximately 14%. In volume terms, this equates to a downward adjustment to existing home sales by an average annual rate of almost 720,000 units (between 670,000 and 760,000 units) per month over the past year, with single-family down 600,000 units (580,000 to 640,000) and condominium and co-ops down by around 120,000 (110,000 to 130,000). The largest revision was to November 2009, with a downward shift from the previous estimates of 1.11 million units (930,000 single-family and over 180,000 multifamily).

The NAR note that, “Although rebenchmarking resulted in lower adjustments to several years of home sales data, the month-to-month characterization of market conditions did not change. There are no changes to home prices or month’s supply.”

The NAR attribute the divergence in their sales projections mainly to a decline in for-sale-by-owner (FSBO) properties. These are not reported in the multiple listing service (MLS) data on which their calculations are based, so were included in the model as a fixed market share. The NAR note that “NAR consumer survey data in 2000 showed FSBOs accounted for 16% market share, which fell to a record low 9% in 2010.” They also suggest that some new home sales were inadvertently included in the calculation, as “more builders began marketing new properties through the real estate brokers that weren’t completely filtered from the existing-home data.”


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