It was widely reported that the National Association of Realtors (NAR) may have overcounted the number of U.S. home sales since 2007. If emotions weren’t involved, the impact to residential and commercial real estate for the vast majority of us would be negligible at best. The actual number of home sales isn’t what defines the market, it is the trends those numbers reveal to us that give the numbers meaning. The emotions that are evoked by lowering the number of used home sales, even without changing the trend, will probably cause some homeowners to either lower their asking prices or accept lower offers.
How the mistake was made:
The NAR uses many Multiple Listing Services (MLS) to count used home sales. Many of these services have been expandiing into new territory. This has caused some used home sales to be included in multiple MLS services. These duplicates drove the NAR’s numbers up.
How the mistake was found:
CoreLogic, a real-estate analytics firm, uses property records from local courthouses to determine the number of used home sales. CoreLogic’s numbers are about 20% lower than the numbers NAR has been providing.
What does this mean to the commercial real estate industry?
Not much. The NAR should adjust their method of determining the number of used home sales. Since the trend of used U.S. home sales didn’t change, the revised numbers shouldn’t change our outlook for real estate.