The one-sided Dec. 21 editorial, “Funny numbers, sober market” distorts the intent and purpose of the re-benchmarking process of the National of Association of Realtors.
NAR is committed to providing accurate, reliable data. Because nearly all measurements make assumptions, any changes related to underlying assumptions will lead to a divergence in the measurements. NAR’s existing-homes series is no exception.
Last year, NAR economists noted that the model for calculating sales rates had gradually diverged from the actual marketplace for existing-home sales from 2007 through 2010 due to fewer for-sale-by-owner transactions, growth in multiple-listing service coverage areas from which sales data are collected, geographic population shifts and more new-home builders marketing their properties through Realtors.
NAR’s research division began working on a re-benchmarking process earlier this year and worked as quickly as possible to resolve the issues noted above. Resolving the issues was complicated by a lack of decennial data on housing from the U.S. Census Bureau, which the bureau no longer collects.
The editorial also implies that NAR intentionally misled the public about housing figures, which could not be further from the truth. Estimating existing-home sales, or any national data series, is a complex process. We recognize our responsibility in providing the gold standard in housing data, which is important to the industry, government, Wall Street and consumers, and we have been transparent throughout the entire benchmarking process. Most data series go through periodic re-benchmarking, and it’s a normal process for NAR as well as government agencies and organizations, and was most recently done by NAR in 2005.
NAR has consulted with outside experts and government agencies to ensure accurate modeling and has received their approval on its data review practices. Moving forward, NAR will benchmark the data every year, greatly reducing any data drifts. Despite how your editorial tries to position the issue, irresponsible lending practices are to blame for the housing downturn, and not the nation’s support of homeownership. Throughout its history, the United States has encouraged homeownership because it contributes to stable communities, supports our nation’s economy and helps families build wealth.
On the issue of the Federal Housing Administration and loan limits, NAR fully supports the return of private lenders to the mortgage market; however, the private market has not yet returned at any robust level and so mortgage availability remains a real concern. Reduced loan limits means that fewer people have access to mortgage loans and the loans that are available are more expensive, which only further restricts liquidity as the housing market continues its soft recovery.
The editorial also fails to note that the higher limits will help improve FHA’s finances; every recent audit has shown that higher-balance loans perform better than lower-balance loans.
The bottom line is that if you remove government support of homeownership, you erode the ability of many Americans to establish and build the kind of stability that owning a home can provide. And since homeowners currently pay 80 to 90 percent of U.S. federal income tax, reducing the number of homeowners in our society could ultimately mean reduced revenue for the government.
— Lawrence Yun, chief economist, National Association of Realtors, Washington
