How do I loathe home price day?

Let me count the ways.

The rash generalizations, the seasonal vs. non-seasonal adjustment confusion, the month-to-month vs. year-over-year, the contention among all the varied home price reports from the various and varied entities that track them.

I could go on, but if you are a regular Realty Check reader, you’ve heard all this before.

This month is particularly frustrating, because the big headline from SP/Case Shiller was that home prices rose for the first time in eight months. Okay, yes, from March to April, with no seasonal adjustments, home prices rose barely, less than one percent, in the nation’s top 20 housing markets. When you seasonally adjust those numbers, the prices fall. Why?

Because in different seasons, different types of buyers buy different types of homes.

The Spring market is historically replete with families; these are move-up buyers, purchasing larger, more expensive homes. That skews the overall prices higher. They buy in the Spring because they want to move over the summer, when school is out. You tend to see more single and first-time buyers in the fall.

This is why I judge prices year over year, because you are comparing apples to apples. Prices are down in 19 out of the top 20 markets year-over-year, with six markets hitting new lows on the SP/Case Shiller Home Price Index.

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It wasn’t at all what I expected. With accusations over the weekend by various journalists that the Realtors have been overestimating existing home sales numbers, I was ready for a full-court PR press at this morning’s monthly sales report lockup. Not so much.

NAR chief economist Lawrence Yun opened with, “This is going to be a fun press conference!” After detailing the usual monthly report, and carefully acknowledging a nearly 33 percentage point seasonal adjustment in sales numbers (!), Yun addressed the brewing controversy. He explained how they last “benchmarked” sales using Census figures back in 2000, but that they couldn’t do that in 2010 because the Census changed some of its survey questions. He admitted that the last revision to data in 2000 showed a 13 percent “drift,” as in the NAR’s numbers were 13 percent too high.

I won’t get into all the reasons for the “benchmark” troubles…okay, it’s really 3 reasons: 1) Consolidation of many MLS’s (multiple listing service—where Realtors list properties), so a rise in the numbers could be due to the MLS’s area getting bigger, not more sales, 2) Properties being listed on multiple MLS’s (so sales are double counted), and 3) A big drop in For Sale By Owner properties, so with more sellers using agents, there are more properties on the MLS to sell.

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