NAR's David Lereah: His Own Words on Housing

by: Barry Ritholtz

Last week, we noted the absurdity of the housing commentary by the oft hallucinatory David Lereah (Existing Home Sales Are Fantastic!). It was a pundit pile-on: Marketbeat compared Lereah to Baghdad Bob, Minyanville noted "Existing-Home Sales Continuing to Stabilize In Terms of Plummeting."

But you may have missed (it was late in the day) the biggest takedown of the lot: Marketwatch's Rex Nutting went postal on Lereah. Not via clever or snarky language (the way the rest of us hacks did), but with actual data - and even more damning, with Lereah's own words.

Nutting writes: "Here's what Lereah was saying throughout 2006 and into 2007, and what the market was doing:"

January 2006
Lereah's forecast: "The market is in the process of normalization."

Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.

Lereah's post-mortem: "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead."

April 2006
Lereah's forecast: "Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau."

Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.

Lereah's post-mortem: "This is additional evidence that we're experiencing a soft landing."

July 2006
Lereah's forecast: "The market should even out just below present levels."

Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.

Lereah's post-mortem: "The market is stabilizing."

October 2006
Lereah's forecast: "We expect sales activity to pick up early next year."

Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.

Lereah's post-mortem: "This is likely the trough in sales."

January 2007
Lereah's forecast: "The good news is that the steady improvement in sales will support price appreciation moving forward."

Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.
Lereah's post-mortem: "It appears we have established a bottom."

It's not that Lereah is a bad economist; that's not even his job. Rather, his responsibilities are to use the tools of the economic profession, and apply them to shill for the NAR, a trade organization. After all, as Nutting notes,

..there are two universal truths at the National Association of Realtors: 1) It's always a good time to buy or sell a home; and 2) We've seen the worst of the housing market correction.

Realtors' economist stayed sunny all year
Commentary: David Lereah saw bottom in first quarter, second quarter ...
Rex Nutting
MarketWatch, 5:31 PM ET Jan 25, 2007