NAR and Housing Forecasts

With the oft hallucinatory David Lereah now gone from the NAR, one would expect hope that the Realtor Group would take off the cheerleading outfit and get real.

So far, that wish appears to be unfulfilled. There have been only grudging signs of any reality check taking place. Wednesday's NAR release noted:

"Existing-home sales are projected to total 6.18 million in 2007 and 6.41 million next year, in contrast with 6.48 million in 2006. New-home sales are forecast at 860,000 this year and 901,000 in 2008, down from 1.05 million last year.  Housing starts are likely to total 1.43 million units in 2007 and 1.49 million next year, below the 1.80 million recorded in 2006.

The national median existing-home price should ease by 1.3 percent to $219,100 in 2007 before rising 1.7 percent next year.  The median new-home price will probably fall 2.3 percent to $240,800 this year, and then grow by 2.6 percent in 2008.

Unfortunately, the Realtor group remains a spin organization, unable to release information without sugarcoating it. Their headline is the reality-challenged "Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn."

Further, they somehow omitted the simple fact that, even by their own too cheery data, Existing-home sales are forecast to drop 4.6% (they provided the data, but refused to do the math). And the group still has failed to acknowledge the extent of the overbuilding and inventory problems, insisting “We continue to experience a temporary distortion in comparing median existing-home prices.”

Um, no. It's a major correction after an enormous run up due to free money. And as mortgage rates tick higher, that 30% correction (first mentioned here) is looking more and more possible.

Regardless, Investech's Jim Stack has disabused the group of its forecasting accuracy. In a June 1st commentary, Stack looked at his   Housing Bellwether chart, and plotted some of the more outrageous/egregious comments from former NAR Chief Economist:
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click for larger graphic

Chart courtesy of Investech Research

By being such dishonest brokers of information, the NAR has now made themselves look ridiculous. No one knows what the future will bring, but consistently absurd spin offered up by the Realtor group not only does a disservice to the public, but is now working against the interest of Realtors themselves.

My advice to them: Stop the crap, and try a little honesty.

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Sources:
Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn
June 06, 2007
http://www.realtor.org/press_room/news_releases/2007/home_sales_projected_to_fluctuate.html

Comments

[Dabbio:]

I believe that Barry's advice to the NAR is correct, but should have been delivered on exactly the other side of the curve, i.e., in that 2003-2004 era, when things were shooting up. Delivered and, if received seriously, at this late date, will only exacerbate the decline. See, e.g., Charles Kindleberger's prescient www.amazon.com/Manias-...
and remember that you read it here first.

2007 Jun 08 09:26 AM

[Dabbio:]

Worse still, however, would have been to delay his advice further. Better to take the hit now. If postponed further, the fall can only get worse. As Senator Claghorn said, however, "Them's my views. And if you don't like 'em... I'll change 'em!"

2007 Jun 08 09:30 AM

[wixeywaxy:]

Hey, there are many still in denial. The housing market is weak, no question about it. The real queston is how important is it to the economy and I think their is room for debate on that. Given that there is a slow down in the economy as well, it doesn't follow that the first is the cause of the second. It could be the other way around, in large measure anyway. It's like sin, we all only focus on our own view of it. Vic

2007 Jun 08 02:35 PM

[censeo:]

Do little more homework.

2007 Jun 08 10:10 PM

[censeo:]

It used to be said that if you were to lay every economist end to end they wouldn't reach a conclusion. Sadly, this isn't still true. Too bad that these over-educated fools have been given a voice and bigger fools follow their advice to their own ruin. (Schiller is the eccentric who at least formulates the questions cogently.) I'd like to know the home purchasing statistics for the 100 top paid economists over the last five years. Do they make book on their own crystal ball antics? My forecast; In five years "residential real estate" and "investment" won't even show up on the same news page.

2007 Jun 08 10:09 PM

[Sonia Mirza:]

I confess I havent read the release yet, but preliminary question; what is the below forecast based on???

"national median existing-home price should ease by 1.3 percent to $219,100 in 2007 before rising 1.7 percent next year. The median new-home price will probably fall 2.3 percent to $240,800 this year, and then grow by 2.6 percent in 2008"

And based on this, should I buy me a crib?!

2007 Jun 11 07:52 PM