Flawed housing sales numbers released by the National Association of Realtors (NAR) for the past several years have stirred concerns that the nation’s housing recovery may be longer in coming than analysts had hoped. But local sales numbers should be unaffected by the revisions, suggesting that the Bay State’s wimpy, sputtering recovery is the real deal.

That’s because the process by which the Massachusetts Association of Realtors (MAR) generates its numbers is simpler than the one by which the national numbers are generated, explained Eric Berman, spokesman for the group. While the national sales numbers are generated by using statistical methods to project a total based on a small sample of sales from around the country, MAR simply compiles an aggregate of total sales reported by the three Multiple Listing Services (MLS) within the state.

Such numbers may not account for all sales. A house may be sold by its owner directly without being entered into an MLS. Also, two of the MLSs the group uses for its tally, the Berkshire County Board of Realtors MLS and the Cape Cod and Islands MLS, are open only to Realtors, and may not tally sales made by non-Realtor real estate agents. (The third and largest MLS in the state, MLS PIN, is open to non-Realtors.) Home sales figures generated through public records, such as those compiled by The Warren Group, publisher of Banker & Tradesman, are more comprehensive but may take longer to be compiled as several weeks can pass between a closing and the records being updated.

NAR arrives at its national sales by using a sample of total sales reported to it from members through MLSs and large brokers, and combining that figure with a "multiplier" meant to account for sales though FSBOs and other channels which don’t report figures to the group.

NAR had come to an estimate of its "multiplier" by using answers from certain questions asked by the U.S. Census. The most recent census survey which asked about housing was in 2000, and the multiplier had not been recalibrated since 2004. Over the past several years, NAR’s estimates of total housing sales numbers have diverged significantly from those of other housing experts who base their estimates on public records.

Earlier this month, data and analysis firm CoreLogic alleged in its quarterly report on housing sales that "NAR’s existing home sales data are overstated by about 15 [percent] to 20 [percent]," suggesting that overall housing sales might have fallen by as much as 12 percent in 2010 as compared to 2009. NAR had estimated that sales had fallen only 5 percent during that period.

CoreLogic and other analysts have suggested that one reason for the bad numbers is that there’s been a lot of MLS consolidation over the past few years and so NAR is actually capturing a bigger chunk of sales than it used to. In Massachusetts, however, MLS consolidation has not been a factor, since Massachusetts has had the same number of MLSs for over a decade.

NAR has admitted that there may be flaws in its data. "In statistics, one just assumes the positive and negative noises cancel each other out. It is, however, possible for this statistical noise to drift mostly in one direction and hence cumulatively add up over many years," the group said in a FAQ on its homepage.
The organization will readjust its benchmark and release revised numbers this summer.