The National Association of Realtors said Wednesday that it overestimated home sales by nearly 15% last year, an indication that the housing market is in even worse shape than many experts previously thought.
The realtor group said it now estimates that 4.2 million existing homes were sold last year, or 715,000 less than its previous estimate of 4.9 million homes sold.
Roughly half of the revision was due to a decline in for-sale-by-owner homes that were not reported on the multiple listing services databases set up by realtors. The National Association of Realtors found that for-sale-by-owners homes accounted for 16% of all existing properties sold in 2000, but that number dropped to 9% last year.
Because of the housing downturn, more homeowners either have kept their homes off the market or have used realtors to sell their homes, which skewed the trade group's methodology, according to NAR spokesman Walter Molony. He also attributed the overcounting to homes being listed on several multiple listing services, which resulted in double-counting.
NAR's revision comes nearly a year after doubts were first raised about its methodology. Economists with the analytics firm CoreLogic issued a report in February claiming the trade group was inflating its numbers.
The group's data on existing home sales will be revised downward by 14.3% for the past five years, from 2007 through 2010.
"It's a research and methodology issue that was out of date," says Sam Khater, CoreLogic's senior economist. "Over the course of 10 years, small differences can add up."
NAR used Census Bureau data from 2000 to determine the total number of existing homes. It now plans to revise its data every year using the Census' American community survey, Molony said.
By comparison, CoreLogic counts home sales from filings at county recorder offices nationwide and benchmarks the changes in ownership against data from the Mortgage Bankers Association, the Census and from bank filings.