Revisions Will Show Fewer U.S. Existing Homes Purchased From 2007 to 2011

Fewer existing homes were sold since 2007 than previously estimated, painting an even bleaker picture of the industry that precipitated the U.S. recession, a report from the National Association of Realtors will show today.

“Although there are downward revisions for total sales in recent years, there is little change to previously reported monthly comparisons or characterizations based on percentage change,” Walter Molony, a spokesman for the group, said in an e-mailed statement last week. He said the revisions will include comparable reductions in inventories and no change in prices.

CoreLogic Inc., a real-estate analytics company, released a report in February showing that 3.3 million existing homes were sold in 2010, less than the 4.91 million tallied by NAR. Today’s report will also show that purchases increased to a 5.05 million annual rate in November from 4.97 million the prior month, according to the median forecast of 71 economists surveyed by Bloomberg News.

The range of November estimates, from a low of 4.38 million to a high of 5.25 million, was wider than normal because some economists factored in assumptions for the NAR revisions while others didn’t.

Housing, which helped trigger the 18-month recession that ended in June 2009 when subprime borrowers defaulted, is showing signs of stabilizing as builder confidence improves and construction picks up. Nonetheless, another wave of foreclosures will probably push prices down further as more marked-down properties come on the market.

‘Steep Correction’

“Housing’s done an incredibly steep correction,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “In general, demand for houses is still pretty weak. We have a big supply, a big shadow inventory.”

The NAR data are due at 10 a.m. in Washington.

Figures from other trackers of home sales show a slower pace of purchases compared with NAR. CoreLogic, based in Santa Ana, California, monitors sales figures through property records at local courthouses, while NAR follows sales through the multiple-listing services used by real-estate agents.

NAR tallies in recent years may have been overstated because the consolidation of listing services could have caused distortions in the data, according to Lawrence Yun, chief economist at the Realtors’ group. He said estimates of direct sales by owners may also have been overstated.

Market Strains

“The benchmark revision to the NAR data should be watched extra carefully by long-term investors, as we expect the revision to reflect the ‘strains’ in housing markets that we find in” figures from Fannie Mae and Freddie Mac, Herrmann, who is projecting demand will be revised down by about 9 percent, said in a research note this week.

The median value of an existing house fell to $162,500 in October from $170,600 a year earlier, according to NAR data. The value plunged from a July 2006 record of $230,300 to a low of $156,100 in February.

There are signs the industry may be stabilizing. Builders broke ground on more houses in November than at any time in the past 19 months and construction permits climbed to the highest level since March 2010, Commerce Department data showed yesterday.

The National Association of Home Builders/Wells Fargo index of builder confidence rose in December for a third straight month, reaching the highest level since May 2010.

No Slowdown

“November is a time that historically sales slow down,” Larry Sorsby, chief financial officer at builder Hovnanian Enterprises Inc. (HOV), said on a Dec. 15 call with analysts. “And this year we’ve not seen as dramatic a slowdown as we have in recent prior years. The market feels a little bit better than we would have expected.”

The Standard & Poor’s Supercomposite Homebuilder Index of 12 builders surged yesterday after a report showed housing starts climbed. The gauge jumped 6.4 percent, compared with a 3 percent increase for the broader S&P 500 Index.

The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

Federal Reserve policy makers reiterated at a meeting this month that they will keep the benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

                        Bloomberg Survey

==================================
                             Exist
                             Homes
                              Mlns
==================================

Date of Release              12/21
Observation Period            Nov.
----------------------------------
Median                        5.05
Average                       4.99
High Forecast                 5.25
Low Forecast                  4.38
Number of Participants          71
Previous                      4.97
----------------------------------
4CAST                         4.92
ABN Amro                      5.07
Action Economics              4.95
Aletti Gestielle              5.10
Ameriprise Financial          5.05
Banca Aletti                  4.95
Bank of Tokyo- Mitsubishi     5.10
Bantleon Bank AG              5.10
Barclays Capital              5.07
BBVA                          5.00
BMO Capital Markets           5.15
BNP Paribas                   5.05
BofA Merrill Lynch            5.10
Briefing.com                  5.20
Capital Economics             4.60
CIBC World Markets            4.95
Citi                          5.10
ClearView Economics           5.10
Comerica                      5.00
Commerzbank AG                4.50
Credit Agricole CIB           5.10
Credit Suisse                 5.17
Daiwa Securities America      5.00
Desjardins Group              5.15
Deutsche Bank Securities      5.10
Exane                         5.05
First Trust Advisors          4.45
FTN Financial                 5.25
Goldman, Sachs & Co.          5.02
Helaba                        5.10
High Frequency Economics      5.10
HSBC Markets                  4.50
Hugh Johnson Advisors         5.00
IDEAglobal                    5.10
IHS Global Insight            5.07
Informa Global Markets        5.15
ING Financial Markets         5.00
Insight Economics             5.05
Intesa-SanPaulo               5.10
J.P. Morgan Chase             5.05
Janney Montgomery Scott       5.19
Landesbank Berlin             5.15
Landesbank BW                 5.05
Market Securities             4.47
MET Capital Advisors          4.83
Mizuho Securities             5.02
Moody’s Analytics             4.87
Morgan Stanley & Co.          5.00
National Bank Financial       5.10
Natixis                       5.11
Nomura Securities             4.40
OSK Group/DMG                 5.11
O’Sullivan                    4.40
Parthenon Group               4.61
Pierpont Securities           5.15
PineBridge Investments        4.95
PNC Bank                      4.92
Raiffeisenbank International  5.20
Raymond James                 5.05
RBS Securities                5.00
Scotia Capital                5.15
SMBC Nikko Securities         5.15
Societe Generale              5.08
State Street Global Markets   4.58
Stone & McCarthy Research     5.10
TD Securities                 5.20
UBS                           4.38
University of Maryland        4.93
WestLB AG                     5.00
Westpac Banking Co.           5.12
Wrightson ICAP                5.20
==================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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