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’s been only grudging signs of any reality check taking place. Yesterday’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. Its 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:

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.


Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn
June 06, 2007

What's been said:

Discussions found on the web:
  1. michael shumacher commented on Jun 7

    the more telling portion is the forecast for recessionary prices in home sales and then he leaves to go work for a hedge fund (or something close-I did’nt pay attention to where he went). And the new guy just can’t seem to pronounce anything with the letter “r” in it…..LOL


  2. Max commented on Jun 7

    And as mortgage rates tick higher, that 30% correction (first mentioned here)

    Yeah right.

  3. V L commented on Jun 7

    Wow, crazy bond panic selloff, the 10-year yield is 5.113%

    How can they expect the housing to rebound while the mortgage rates are going higher?

  4. Jim commented on Jun 7

    Market will correct big time over the next few months in my opinion. The housing market will not stand for higher rates. Bond market is getting crushed.

    A cruel summer is in order.

  5. GerryL commented on Jun 7

    I find it interesting that the media keeps talking about rising interest rates but I have yet to hear anyone mention how it might affect housing.

  6. Paul Meisel commented on Jun 7

    Barry, it really boggles the mind. An occasional over-optimistic comment to cheer up your members when forced to comment, OK, but there are maybe about 4 or 5 cities in the US that aren’t hurting…. so who are they trying to fool? Future home buyers? They are the same people that can’t get what they want for their house now.

  7. michael shumacher commented on Jun 7


    It’s the mechanism to raising interest rates since our wonderful Fed refuses to do it.. the bond market will happily comply by raising yields.

    I still expect some painting to go on later today…..they can’t really upgrade much now since there is little left to upgrade!!

    The attempted hand-off to retail is pretty much done……how successful it was only time will tell.


  8. Ralph commented on Jun 7

    I remember in the Dot Com era when Jeff Bezos, CEO of Amazon, went from internet poster child to internet Pinata.

    I predicted the same for Lerach months ago. Then he went off and took another job. A savvy on his part. He saw the top and got out.

    I suspect that this will only be a partial save for him. When the real estate market gets really bad (not there yet) and the press is looking for scapegoats, his name is bound to be resurrected but I do suspect that he will avoid the worst of it.

  9. KirkH commented on Jun 7

    I saw an old friend at the bar, he’s about to have a kid, great wife, gigantic adjustable rate mortgage which he has absolutely zero chance of paying off. Maybe he bought because he believed the NAR which was widely quoted by our econ-illiterate, home-owning, press.

    It’s like talking to someone who’s tied to the train tracks and nothing can be done. I didn’t tell him a train was coming.

    I think he had an inkling but he kept referring to another guy in his 20s who just bought an $800,000 house in San Diego. It went something like this: “Yeah I’m going to get hit by an Amtrak, but Ted, man, Ted’s going to get hit by a freight train! Poor bastard”

  10. Stuart commented on Jun 7

    Barry, if only JIm would do a similar chart with notable Ben Bernanke quotes. That would be interesting. The main question is what data set would you overlay them with as there are multiple options, but this same housing bubble chart would also work. Excellent post.

  11. wally commented on Jun 7

    “Unfortunately, the Realtor group remains a spin organization”

    Tell me – why they should be any different than the US government?

  12. mhm commented on Jun 7

    The question now is will the collars be triggered?

  13. ECONOMISTA NON GRATA commented on Jun 7

    Geezzzzzz! It’s almost like beating a dead horse. David Lereah and NAR gave up their credibility before they ever had any. However, I don’t blame them, they are under a great deal of pressure from the membership, trust me, it’s a collective issue.

    As for your prediction of a 30% price correction, that was yesterday, are you looking for an additional 30%..? This is going to be a severe, long and painful correction, a la Japan…

    Outside of housing, it looks as if things are going to get nasty very quickly around this neck of the woods…..

    Best regards,


  14. Michael commented on Jun 7

    i’ll 1 up you Barry. By the end of 2009 inflation adjusted housing numbers might be down 50% in some of the more overextended regions of the country. I.E. Phoenix, all of Cal., all of Florida, you get the picture.

  15. ManhattanGuy commented on Jun 7

    shorting Amazon here . .market seems to be in short term correction mode

  16. UncleAnon commented on Jun 7

    In some parts of the country that are more desirable than are other parts of the country there still exists a housing shortage.

    But even in California sales have slackened a bit although overall prices have remained fairly sticky in the most desirable areas.

    Since there is no national market where home ownership is traded like stocks I do not get all upset by these national numbers. The only thing that is important is what is happening in the area you want to live in.

    Otherwise we could be discussing real estate prices in Mexico.

    As far as interest rates and housing goes I do not think we’ve ever had the demand for housing we had when mortage rates where 12-17%. We had people standing in lines to buy houses when rates were that high.

    Today we have, in some areas and in varying degrees, an oversupply of housing. It will not last. It never does.

  17. David Merkel commented on Jun 7

    Barry, you might remember that piece of mine that you liked, “The Fundamentals of Market Tops“? Well, there was a second piece like it, called “Real Estate’s Top Looms“. I don’t know what date is at the peak of that chart (where the #1 is), but it is awfully close to when I published that piece. So it goes.


  18. Bob Brooklyn commented on Jun 7

    Go re-read NYT April 11, 2004 “Blue Skies and Green Yards, All Lost to Red Ink”, as well as The Observer’s current “New York’s Longest-Running Real-Estate ‘Joke’ ” …

    People, if you didn’t learn from the (in rough RICO-chronological order) : junk bond bubble, the HMO bubble, the internet bubble, the IPO bubble, the credit bubble, and still fell for housing bubble, well, there’s no accounting for mismanagement…

    History repeats whether you want it to or not.

  19. Zephyr commented on Jun 7

    We are in the middle of the housing price decline. Price declines this year should be worse than what we have seen during the last two years.

  20. sylvia commented on Jun 8

    Um, that last quote on the chart is a joke, right?

  21. marinite commented on Jun 8

    “as mortgage rates tick higher, that 30% correction (first mentioned here)…”

    BS. You started your blog in Sept 06. I started mine on July 05 when it was still highly unfashionable to claim there was a housing bubble in the Bay Area and back then I figured a 35% decline for Marin was in order (little did I know at that time that the correction would hit Marin’s bottom half of the market; live and learn I guess). Other who started before then also claimed 30% or more declines (e.g., BubbleMeter).

  22. Bob Brooklyn commented on Jun 9

    If Bob Guccione’s double-wide * didn’t go at $ 99m (my no-doc, 110% LTV, 40-year, closing-costs-financed app was rejected…) what hope is there for the rest of our home values ?

    * (mansion on the Park, East Side, complete with marble, and, um, stained glass, now yours for only $ 59m.)

  23. Mark C commented on Jun 18

    *** Since there is no national market where home ownership is traded like stocks I do not get all upset by these national numbers. The only thing that is important is what is happening in the area you want to live in. ***

    Wow, that’s unbelievably naive. The national economy has been buoyed for more than a decade by a “wealth effect.” People are able to spend more, despite stagnant incomes, because of increase housing equity. When millions see their little real estate nest egg evaporate it could be disasterous.

  24. Coyflyte commented on Jun 18

    Economists are no different than natives trying to pacify the volcano by throwing virgins into it.
    The Fed has little or no control.
    Politicians are either clueless or in denial.
    Bankers are like a bunch of lemmings leading each other to the sea.
    The consumer debt crisis, when it comes, will shake this country to its very foundation.

  25. Wonkette commented on Jun 19

    Iraq & the Housing Crash: Totally the Same!

    The collapse of the U.S. housing market and the U.S. occupation of Iraq are both total disasters, but did you know they are similar in so many other ways? The war boosters keep saying things will get better in six…

  26. gistout commented on Sep 14

    “Bankers are like a bunch of lemmings …..”

    Just a notification of being cited as quotable metaphors/analogies in “Archive of Metaphor and Analogy”.
    Thank you.

  27. IP commented on Nov 18

    all you people are sheep and are all renters with no money

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