At the risk of beating a dead horse, I feel we must revisit the “pending” issue once more. This time, we’ll take it from the top.
Prior to June of last year, a “pending” sale in the NWMLS system was defined as a sale in which an offer had been accepted, inspection and/or feasibility studies had been passed, and the parties were proceeding down the path to a near-certain closed sale. This is likely why on average, only around 5% of “pending” sales did not convert to “closed” status after 30 days from 2000 through 2007.
In late June of last year, the definition of “pending” changed. The biggest change was that homes that were previously considered “active” and “subject to inspection” were now part of a new category: “pending inspection.” Two other categories of “pending” status were added as well.
As recently as February of this year, I had received assurances that this change in pending statuses was not affecting the end-of-month statistics being reported by the NWMLS. We specifically asked their “statistician,” who assured us that the definition of “pending” used to calculate the end-of-month statistics had remained constant.
However, last week reader “One Eyed Man” reported receiving the following in an email from the NWMLS Director of Business Development and Member Relations (emphasis mine):
Our pending stats are based on the pending date received, so we count only the listings that went to pending during the month. In addition, all pending statuses count as pending. When a listing moves from pending inspection to pending, we do not count it again.
Since he stated that “all pending statuses count as pending,” it would seem that they are now counting “pending inspection” as “pending” in their end-of-month reports.
This is important for two reasons. First, we know for a fact that until at least July’s data, any year-over-year “pending sales” data is now useless. Second, if the change was made sometime between February and April, it could even be creating an illusory “spring bounce” (clearly visible in comparing the first two charts here), giving the pending sales data an extra bump that is not necessarily the result of additional buyer activity. That would also make the year-over-year stats useless until March or April.
Until we receive some straight answers from the NWMLS as to when exactly they changed how they report end-of-month pending sales, I don’t believe we can rely on any year-over-year comparisons of this metric. Please keep this in mind over the next year or so when we look at pending sales.
According to a June 2008 message from the NWMLS quoted below by commenter JJL (a Realtor), the information I received in February via the NWMLS statistician was apparently completely false, and the new pending categories have been counted in the end-of-month reports since July last year. At least that answers one question. Unfortunately, we still have no way of knowing how many “pending inspection” listings tend to revert to “active,” or whether the percentage of the total pending sales that are “pending inspection” is increasing in recent months compared to the winter.