Pending home sales in Massachusetts soared in May – or did they?
The Massachusetts Association of Realtors (MAR) reported this week that pending home sales – those with a signed Purchase & Sale agreement – for Singe Family Homes (SFHs) soared by 84% in May compared with May 2012, and by 58% compared with April 2013.
Great! But wait a minute. As I reported in this post One-day record for homes going under agreement the MLS changed its methodology of reporting sales with an accepted offer as of May 17, but DID NOT ADJUST THE HISTORIC DATA!!!!!
The change greatly increased the number of homes reported as being Under Agreement (UAG), what MAR calls pending sales. That at least could be explained. But now organizations like MAR are reporting comparisons with prior years when the numbers were calculated using the old system. And according to press reports the old categories have been eliminated from the database.
There is, of course, one way to get accurate historic information. That would be to go into the MLS database and look at each transaction individually. I did a quick test and found it took me 45 seconds to get the information for one sale. In 2012 there were 42,715 SFHs sold in MA and 17,253 condos, for a total of 59,968. At 45 seconds each that would take me almost exactly 750 hours to review, and then of course I’d have to tabulate the data.
Just in case you are wondering, I don’t plan to spend my summer doing that.
And to complicate the matter still further “in the week of June 24” the MLS will add a new category, Contingent, for properties with an Accepted Offer with a contingency, such as financing or inspection.
My very first article in the Marblehead Reporter was entitled “Lies, Damned Lies and Statistics”. I set out to try to explain statistics in a more accurate manner than was mostly being reported by those sources that took the “numbers” and published them without analysis.
Thanks to the MLS my job has been made even harder. Remember, that unless somebody finds an “Undo delete” button in the database, all the pending sales numbers for the next year will need an asterisk to explain that they are not comparable with the prior year.
Let’s go back to May. All we can really say about May is that it was an active month. And you don’t need a statistician to tell you that: just ask a Realtor.
So be careful when you read articles on pending home sales and remember to check in here for clarification. The good news is that data for actual sales and median prices, probably the two most important stats for longer-term trends, are unaffected by the MLS changes.
And in a couple of weeks we will have data for the first 6 months of 2013 which will give us a pretty good picture of what has happened this year.