Latest NAR Rave: Home Prices Seen Rising in '07

by: Barry Ritholtz

After bottoming in the fourth quarter of 2006, existing-home sales are forecast to gradually rise through 2007 and into 2008, while new-home sales should turnaround by summer, according to the latest forecast by the National Association of Realtors.

-NAR Press release

That's the drug-addled ravings most recently unveiled by the tripheads at the National Association of Realtors. At a recent rave, David Lereah was heard to say: "Dude, look at the trails - and the colors! Awesome!" He then giggled and wandered off, muttering to himself about New Home cancellation rates.

The rest of the NAR release amounted to a thinly veiled cry for help, revealing deep problems with either alcohol abuse or dementia. In a related development, several NAR economists were treated for blunt head trauma, a medical condition which helps explain the rest of their recent public statements.

According to the NAR:

  • Existing-home sales for 2006 are expected to come in at 6.50 million; Existing-home sales are forecast to total 6.42 million in 2007;
  • Total housing starts for 2006 are likely to be 1.81 million units; Total starts for 2007 are forecast to be 1.51 million; This is a drop of 16.6%, to the lowest level in a decade;
  • Median existing-home price for all of 2006 is expected to rise 1.1% to $222,100; for 2007, NAR forecasts a gain of 1.5% to $225,300.
  • Median new-home price rose only 0.3% to $241,600 in 2006; NAR projects it to grow 3.0% in 2007 to $248,900.
  • Annual totals for existing-home sales will be fairly comparable between 2006 and 2007
  • Note that some people who were not in the throes of a hallucinatory experience disagreed with the NAR assessment: Mortgage Bankers Association chief economist Doug Duncan said "Some markets could see price declines of 10% to 20% this year, a shift from the last four to five years, when there were almost no markets where prices were declining." Further, the sober Mr. Duncan forecasts that "Home sales will decline 7% to 8% this year, with most of the decline in the first half."


    Gradual Rise Projected for Home Sales
    National Association of Realtors, WASHINGTON, January 10, 2007

    Home Prices Seen Rising in '07
    WSJ, January 11, 2007; Page D2