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The Truth About NAR’s Home Sales Numbers

The Truth About NAR’s Home Sales Numbers

The National Association of Realtors (NAR) released their latest Existing Homes Sales Report last Friday. The year-over-year comparison of overall sales did not paint a pretty picture. NAR itself called the sales numbers “subdued”. Other media sources used stronger terminology.

There is no doubt that home sales were lower this February (4.60 million) than last February (4.95 million). However, a closer look at the report gives us some evidence as to why that is. Last year, of the 4.95M homes sold, 25% were distressed properties (foreclosures and
short sales). This February, only 16% of
sales were made up of distressed properties.


Well, if we do the math, we can see that the annualized number of non-distressed properties sold which was revealed in the latest report (3,864,000) was actually greater than the annualized number of non-distressed properties sold that was reported last year (3,712,500). As we sell-off the ‘shadow inventory’ of distressed properties, there will be less homes from which a potential buyer can choose. That will impact sales.

As proof of this point, we can look at the months’ supply of housing inventory available for purchase. In a normal market, a six month supply would be optimum. However, we haven’t reached a six month supply once in over 18 months. This shortage of inventory is the main reason sales are down.


As prices continue to rise, more and more homeowners will be freed from the shackles of negative or limited equity. This combined with an improving economy will allow homeowners to again feel confident that they can sell their homes and move on with their future plans. We are already starting to see increases in listings coming onto the market (unsold inventory is 5.3 percent above a year ago). Once housing inventory reaches normal levels (a 6 months’ supply) we will again see home sales begin to increase.


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5 replies
  1. Pete Sambets
    Pete Sambets says:

    Thank you for this information. Why do you suppose NAR did not stress this in their Press Release? I have found that NAR’s press releases and advertising generally lean toward the positive and we are left with deciphering what those numbers really mean!

  2. Dave Hanna
    Dave Hanna says:

    I thought the Spin doctors were a music group, not a real estate consulting/media organization.
    Volume is volume, and a nearly 10% drop in unit sales year over year is not good news for the market or the consumer.
    the fact of the matter is the recovery in real estate is local, not national. Many areas continue to lag behind, and mortgage applications are plummeting.
    The top 5% of the financial population continue to make decisions for all based not in fact, but their own limited perception of how healthy the economy is (as in, I have money to enjoy the better things in life again, so all must be well).

    • Steve Harney
      Steve Harney says:

      Dave – Love the Spin Doctors reference. We understand your position. However, CoreLogic’s latest report also shows that distressed sales are off but non-distressed sales are increasing (existing home sales up 18% and New Construction up 23%).

      BTW, purchase money mortgage applications (when someone is buying a home) are off less than 1%. Plummeting? We think that is overstating the issue.

  3. george cuevas
    george cuevas says:

    Interesting take on the NAR news release. I do agree with you. With inventory tighter there are fewer properties to purchase. One thing missing from the article is the impact of investors. Investors, both large and small, we’re a big part of the sales activity in 2013. There are fewer properties for them to purchase.


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