A Realist's Review of NAR Changing Sales Data

 At times, the News is upbeat and easy to hear.  Like the Dow Jones being up over 300 points or over 3% today!!

But then there is the bad news or what seems to be less positive to our health, money or well-being.

Jim Belote, with Union Mortgage, does a great job of providing input on the market with his Mortgage Matters.  This edition is focused on NAR, National Association of Realtors, recasting the sales data for the past few years.  This is being done to correct some errors that overstated sales.

Jim makes a good point that the world in general and Real Estate Market more specifically isn't changed by this correction.

As NAR addresses past activity, the comparisons over time change.  Yet no fewer homes sold last month than actually sold nor did interest rates change from the current 4% range just because the historical data was corrected.

Thus, as you read news reports that banter about "how much worse the market is" due to this recasting of results, take the realistic approach that numbers are numbers but we 

are still where we are at.

And that means in Hampton Roads, the market is still improving with lower inventories, higher sales and historically low interest rates.

But do read, Jim's report....then comment...can you agree with Jim and me?

Why or why not?

Keeping you updated on the market! For the week of  December 19 , 2011 MARKET RECAP Can we trust the data? Everyone is asking that question after the National Association of Realtors said it would revise its home sales data for the past four years. The revised data are scheduled for release this coming Wednesday with the NAR's monthly report on home sales for November. The NAR cited several reasons for revising sales. The most notable reason was that the NAR believed it was overcompensating for sales that did not occur on the regional and local real estate listing services from which the NAR extracted data. The bottom line is that sales and unsold inventory will be revised downward, but monthly percentage changes in sales volumes, months of outstanding inventory, and median home prices will remain unchanged. Some media outlets have attacked the NAR's revisions from an alarmist or snarky angle. Neither is deserved; the NAR is simply admitting that it needs to be more accurate. What the NAR revisions really highlight is the difficulty in producing national numbers that are meaningful to any local market. If you think about it, is a median national sales price of $167,000 meaningful to a tony suburban enclave in Alexandria , Virginia or to an overbuilt Las Vegas ? We would argue that it isn't. That said, we will still post and examine the national numbers, because they interest many market participants. The inputs can also be revealing. For example, Corelogic reported that total home prices were down 3.9 percent in October from a year ago, but prices were down by just 0.5 percent when distressed sales are excluded. This tells us that we have two distinct markets at work, which most of us knew anyway, but which much of the lay public doesn't know. The national numbers can also set the mood and expectations of any one buyer or borrower. It's in our best interest then, and it's also truthful, to highlight the positives in a market dominated by negativity. To that end, we'll mention that Swiss financial services firm Credit Suisse told its clients last week that “ U.S. homes now appear fairly valued compared to median family income.” Credit Suisse's analysis also shows that shadow inventory and mortgage defaults will improve noticeably in 2012. Mortgage rates, contrary to our expectations, will also continue to improve. Most financing options moved lower this past week, with the 30-year fixed-rate loan hitting a new low in many markets (though it's worth noting that a new low can be hit with only a couple basis-points move). Our outlook for an improving stock market, which would draw funds out of the bond market, is being negated by Europe's inability to deal with the near-bankruptcy of a few of its Mediterranean countries. While the sense of urgency to refinance or purchase has been reduced, we still think it's best to lock and take advantage of today's rates. The fact is that most borrowers are less frustrated being locked and wishing they were floating than the reverse. Economic Indicator Release Date and Time Consensus Estimate Analysis Home Builder Index (December) Mon., Dec. 19, 10:00 am, et 21 Index Important. Sentiment is improving on rising buyer interest and falling distressed-property competition. Housing Starts (November) Tues., Dec. 20, 8:30 am , et 632,000 (Annualized) Important. Increases in permits suggest building activity is gaining permanent traction. Mortgage Applications Wed., Dec. 21, 7:00 am, et None Important. The lull in purchase applications points to moderating sales growth. Existing Home Sales (November) Wed., Dec. 21, 10:00 am, et 5.1 Million (Annualized) Very Important. The NAR's redacted data could raise financial-market volatility. Gross Domestic Product (3rd Quarter 2011) Thurs., Dec. 22, 8:30 am , et 2.1% (Annualized Increase) Important. Revised numbers show that economic growth slowed in the 3 rd quarter. New Home Sales (November) Fri., Dec. 23, 10:00 am, et 313,000 (Annualized) Important. Less pricing pressure and lower inventory levels point to a stronger market heading into 2012. A Prediction With No Guarantee Former Yankees catcher Yogi Berra is as well known for his malapropisms as for his catching ability. On the former, Berra once famously quipped, “It's tough to make predictions, especially about the future.” With that thought in mind, we'll take a shot at predicting the mortgage-rate market for early 2012. The reflexive response is to say that rates have to remain low. After all, the Federal Reserve has openly stated that it will continue to reinvest short-term securities into long-term securities. The Fed also said that it would keep reinvesting in mortgage-backed securities. Both activities will surely raise the pressure for mortgage rates to remain low. Now, couple the Fed's resolve to hold long-term rates low with Europe 's ongoing travails and our own sluggish economy and it would appear mortgage rates would have to remain near today's levels at least through the first quarter of 2012. With all that said, don't overlook or underestimate the “unseen” – the unexpected event that moves markets. Everything seen favors low rates, and few pundits are expecting higher rates. Because of that fact, we think the inevitable “unseen” favors a spike up in rates over a spike down.