Pundit Pile-on: NAR’s David Lerah

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 Lerah 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 Lerah’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

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. Strassertalk commented on Jan 30

    Some eyeopening comments in this Bloomberg article regarding Davos and comments regarding liquidity and mortgage:

    Central bankers warned that “…interest-rate increases in Japan will mop up the global liquidity that has helped fuel the financial-market boom of the past four years.”

    Unsettling when you think of “…financial models linked to the value of U.S. 10-year Treasuries”… and “`The technical modeling that’s embedded in $500 trillion of notional value of derivatives and mortgages and so forth is such that any meaningful moves in long rates have a dramatic impact that rifles through the system,” Klein said. “I can’t tell you why it would move and I don’t predict it will move, but that would be the risk.”

  2. Patu commented on Jan 30

    i think this blog is obsessed with housing. real estate envy or something. I thought just about everyone got rich in the last few years because of the housing move…maybe not. this world economy is so much bigger than just toll brothers real estate slowdown. the housing slowdown is just a pipmple on the back behind of an elephant. evidence the market’s move in the last 8 months…

  3. Larry Nusbaum commented on Jan 30

    The David Lereah obsession lives on!

  4. lewis commented on Jan 30

    Actually, Mr. Nutting missed on the universal truths at NAR, they actually are:

    1) “The best time to buy a house was yesterday”. And what makes Lereah’s job so easy is that over any length of time in modern history, it’s been accurate, which drives most people here crazy.

    2) got this one so 50% accurate
    “It’s always a good time to buy or sell a home” (NOT!)

    the other one is just the current day spin, which changes just like a politician’s spin……hardly a universal truth, just part of the neverending bs, which is not to be confused with universal truths even though universal truths is an oxymoron….


  5. Barry Ritholtz commented on Jan 30

    Hey Patu;

    I am a big fan of Real Estate — I own several properties, 1st/2nd home, and am partners in a commercial real estate venture. In 2006, we sold property and bought property.

    However, given how significant Real Estate has been — to the economy, job creation, consumer spending, GDP, etc., as the big housing move unwinds, I find it fascinating.

    I also have a different take on all the bubble claims. See: Don’t Buy Housing Bubble Propaganda

  6. Teddy commented on Jan 30

    If housing makes a remarkable comeback in the next year, snatching victory from the jaws of defeat, then IMHO, this country is in big, big trouble. It will lead to an exponential increase in the negative savings rate, a comeback in home ATM’s, an exponential increase in the trade and current account deficits, and would send another transitory message to the indebted that debt is good. IMHO,there is a very good reason why we have discussed the housing “phenomenon” on this site for what seems like forever. It’s a giant Ponzi scheme to extract more wealth from most of the citizens of this country and the country itself by the Reverse Robin Hoods.

  7. Barry Ritholtz commented on Jan 30

    For ever other asset class — its either a great time to BUY or to SELL — but never both at the same time.

  8. Monetizin’ the Debt commented on Jan 30

    Ha Ha.

    You’ve been Nussbaumed!

    Dude, you need to get a life! You are the internet’s biggest joke aside from Casey Serin.

  9. Chief Tomahawk commented on Jan 30

    The vast majority of the adjustable mortgages have yet to change. Once that comes on, David Learah’s really going to have an interesting time spinning. Maybe he retires before then, and joins the Board of Directors at Ford?

  10. angryinch commented on Jan 30

    Hey Larry Nussbaum (if that is indeed your name),

    The ad doesn’t say “It’s a Great Time to Buy or Sell a Home”? LOL. Only in the headline.

    I guess that don’t count in NussbaumWorld (if that is indeed where you reside.)

  11. Larry Nusbaum commented on Jan 30


    “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.”

    AGAIN, IT DOESN’T USE THE WORD “ALWAYS” IN THE AD. *either he can’t read or he can’t comprehend* – Now, go get a cookie….

  12. wcw commented on Jan 30

    In re, “over any length of time in modern history, it’s been accurate,” that’s more truthiness than truth, unless you define “modern” as “post-1997”. Take 1979. If you bought in 79Q3, it took you seven (7) years to break even after inflation, and if you didn’t sell then, you were still at breakeven in inflation-adjusted terms in 1997Q1 — almost twenty years later.

    The real truth is a little simpler: “the mortgage interest deduction is the great government subsidy of modern times.” After the tax break, it is almost always a good time to own property.

    Admitting that it’s a gigantic tax dodge doesn’t tend to suit the NAR, though.

  13. Eclectic commented on Jan 30

    The Lereah thing is getting very, very old.

    I enjoy the insightful items posted here and many of the comments that follow them, but the Lereah bashing isn’t accomplishing anything, unless the bashing is all it’s about.

    And I have to tell you… except for the precision with which one can identify his specific comments and then, in hindsight, attack him for them, his g-e-n-e-r-a-l-i-z-e-d remarks have been at least intellectually defendable.

    Give the man a break. The unfortunate circumstances of some builders, buyers, sellers, lenders, etc., in real estate that you attribute to Lereah are not really his core responsibility, and good and honorable business is also being done every day in real estate.

  14. Jim D commented on Jan 31

    I’m baffled that people think that Real Estate isn’t *the* major story of the economy. One in 71 people in California is a licensed realtor. What happens if, say, half of them get unemployed? That’s about 1% of GDP right there, even ignoring the MEW and all the associated money pumped into the economy by the unprecedented run up in housing prices.

Posted Under