The health of the housing market has come under fresh doubts after the National Association of Realtors released substantially revised figures showing 3 million fewer homes than previously thought were sold between 2007 and 2010.
The good news is that NAR’s revised data show that inventory of unsold homes has dropped to a level not seen since 2005; a smaller backlog of homes is generally viewed as a precondition for a healthy clearing market.
Indeed, much of the early analysis in the media seems to suggest the housing market is turning a corner, that the bad news belongs to the past while recent positive home sales and housing starts data, together with low mortgage rates, foretell recovery.
Richard Green, director of the USC Lusk Center for Real Estate, in an interview with AdvisorOne, offered a more sober view of current real estate trends, saying he was “neutral to very cautiously optimistic” about the housing market.
The NAR’s double counting, he said, affects both the numerator and the denominator, meaning that fewer homeowners than previously thought were willing or able to sell their homes in the past few years. “You’re looking at a 14% downward revision in sales. That means we’re probably 14% further away from being through this,” Green, (left), says.