GWEN IFILL: For months, economists and homeowners have been on the hunt for any sign that the nation's robust housing boom may be going bust. This has week has brought mixed news.
The Commerce Department reported today sales of new homes rose a record 13 percent in October, but yesterday, the National Association of Realtors reported sales of previously owned homes fell by nearly 3 percent in the same period. What to make of all of this? For help, we turn to David Lereah, the chief economist for the National Association of Realtors.
For help?. Lereah is biased. Where is the counter argument? We need a debate. Get Ben Jones' on NewsHour.
GWEN IFILL: Was there ever such a thing as a housing bubble?
DAVID LEREAH: I don't like to use the word "bubble" because bubbles burst.
GWEN IFILL: Exactly.
DAVID LEREAH: Balloons don't burst. You can put air in a balloon and it can expand or you can deflate a balloon, where air comes out. So if you're looking at different metro markets around this country that got real hot over the last four years, I like to use the imagery of balloons because they're getting hot. You're putting more air into those balloons. The prices are going up. But now air can come out of the balloon rather than the balloon popping.
GWEN IFILL: So we're hearing a hissing sound rather than a pop.
DAVID LEREAH: I think that's probably the best analogy to use right now.
Ifill says "Exactly." How about some tough questions? Or are you just going to agree with Lererah?
GWEN IFILL: If you're an average home buyer for whom owning a home is your major investment you'll make in your own life, you look at these numbers and you're trying to decide should I be selling now, should I be buying now or should I just stay out of it, what?
DAVID LEREAH: Well, if I'm not a homeowner and I'm thinking of purchasing a home, I would always purchase the home. Be a real estate owner; own property and you'll benefit from equity gains and wealth gains over the years. Have a long-term horizon.
If I'm looking to sell right now, you know, it's still a seller's market but it's starting to transition to a buyer's market so it's a good time to sell if you want to right now.
If I'm a buyer I'm still looking at historically low mortgage rates; even though mortgage rates have risen somewhat, they're still hovering around 6.25 percent. That's historically low. That's low-cost financing. I would take advantage of that.
Lereah says "Well, if I'm not a homeowner and I'm thinking of purchasing a home, I would always purchase the home." Bad idea. Of course he is from the Realtors Association and 'cannot' say that in the bubble markets he would consider holding off purchasing a home.