“The boom is cooling now,” said David Lereah, the chief economist for the association, who added that falling home sales have been “a bit worse than we had anticipated.”As chief economist of the National Association of Realtors (NAR), David Lereah, is responsible for the economic forecasts. Back on October 28th, 2005 the NAR forecasted that:
The group said that it now expected sales to fall further than it has said in the past — about 7.5 percent this year compared with an earlier projection of a 5 percent decline.
So on October 28th, 2005 the David Lereah and the NAR forecasted that there would be a decline of 3.5% in existing home sales for 2006 compared to 2005. Now, Mr. Lereah is forecasting a decline of 7.5% for 2006.Existing-home sales are projected to decline 3.5 percent in 2006 to 6.86 million. New-home sales, seen to grow by 8.0 percent to 1.30 million in 2005, are expected to fall 4.5 percent to 1.24 million next year. The figures for 2006 would be the second highest year for each sector.
The September 2006 forecast is more then double the decline of the October 2005 forecast. Despite the large adjustment from his October 2005 forecast, David Lereah says that the decline is "a bit worse than we had anticipated." This is deceptive. Due to his cheerleading and continuing deceptions Mr. Lereah cannot be trusted.
Posts
I'm sorry, but economists revise forecasts all the time.
ReplyDeleteThe National Association of Realtors revised upward its year-end forecast for home sales and the trade group projects the healthy housing market will stay alive in 2005.
By the end of 2004, existing-home sales should be up 7.9 percent to 6.58 million, easily surpassing 2003's record. In 2005, NAR projects 6.38 million sales, the second highest level in history. The median price on existing homes will rise 7.9 percent to $182,500 in 2004 and another 5 percent in 2005.
New-home sales are expected to rise 8.9 percent to a record 1.18 million in 2004, but only 1.13 million in 2005. New-home prices should be up 8.9 percent to $214,600 in 2004 and another 5.8 percent in 2005.
"We're setting our fourth consecutive record year for existing-home sales, and even with strong fundamentals such as household growth, low interest rates and an improving economy, we simply can't set records every year," said David Lereah, NAR's chief economist.
"Given the sharp rise over last year's record, a lot of buyers have found the home they've been looking for and we can expect a bit of a breather in 2005, which will remain a historically strong year," as builders work to ease the backup in housing demand, he added.
http://realtytimes.com/rtcpages/20041229_decemberrup.htm
The Incredible Shrinking NAR Forecast:
ReplyDeleteJuly 11th, 2006
Existing-home sales are expected to decline 6.7 percent to 6.60 million in 2006 from 7.08 million last year. That would still be the third highest level on record. New-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.
The 30-year fixed-rate mortgage is likely to reach 7.0 percent by the end of the year. June 6th, 2006Existing-home sales are projected to drop 6.8 percent to 6.60 million this year from the record 7.08 million in 2005. New-home sales are forecast to fall 13.4 percent to 1.11 million from a record 1.28 million in 2005. Housing starts are likely to decline 6.2 percent to 1.94 million in 2006 compared with 2.07 million last year.
May 9th,2006
Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year’s record of 1.28 million. Housing starts should decline 3.7 percent to 1.99 million this year compared with 2.07 million in 2005.
April 11th, 2006
Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year – both sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.
March 13, 2006
Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from
the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005 – each sector would be at the third highest year following the tallies for 2005 and 2004. Housing starts are likely to total 1.98 million this year, down 4.3 percent from 2.06 million in 2005.
February 7th, 2006
Existing-home sales are likely to decline 4.7 percent to 6.74 million this year, down from a record 7.07 million units in 2005, while new-home sales are expected to fall 8.5 percent to 1.17 million from a record 1.28 million in 2005; both sectors
would see their third best year after the totals for 2005 and 2004. Housing starts are seen at 1.87 million units in 2006, down 9.3 percent from 2.06 million last year.
The 30-year fixed-rate mortgage should rise to 6.9 percent by the end of the year.January 10th, 2006
After setting a fifth consecutive annual record, projected to 7.10 million units for 2005, * existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006 – that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units – the highest since setting a record 1972 – with a 6.6 percent slowing to 1.94 million this year. December 12th, 2005Existing-home sales, expected to rise 4.7 percent to 7.10 million this year, are likely to decline 3.7 percent in 2006 to 6.84 million. New-home sales, projected to increase 7.0 percent to 1.29 million this year, are forecast to drop 4.8 percent to 1.23 million in 2006 – also the second best on record. Total housing starts for 2005 should grow 5.8 percent to 2.06 million units, the highest since 1972, and then decline 4.8 percent to 1.92 million next year.
October 28th, 2005
Existing-home sales, which should increase 4.8 percent to 7.11 million this
year, are projected to decline 3.5 percent in 2006 to 6.86 million. New-home sales, seen to grow by 8.0 percent to 1.30 million in 2005, are expected to fall 4.5 percent to 1.24 million next year. The figures for 2006 would be the second highest year for each sector.
Total housing starts this year are forecast to be the highest since 1972, rising 5.7 percent to 2.06 million units, before declining 4.6 percent to 1.97 million in 2006.
The 30-year fixed-rate mortgage is projected to rise slowly to 6.7 percent by the end of next year.
condomania wrote "I'm sorry, but economists revise forecasts all the time."
ReplyDeleteTrue. The problem is his later statement that the decline is "a bit worse than we had anticipated." That is the DECEPTION!
David, I would disagree. Was it deception for him to revise the forecast upward for 2004 and 2005? Economists are like weathermen, except they tell you yesterday's weather.
ReplyDeleteDavid, why delete my comment? Which of your blog rules did it violate?
ReplyDeleteSo once again in today's chat we have WAPO's haggerty disclaiming any responsibility to reveal NAR's bias in Post stories.
ReplyDeleteIn addition to an apparent slant in favor of the RE Biz, it seems Haggerty is just plain lazy as a journalist. Why no follow up questions to Leraeh instead of just writing copy from NAR press releases.
We are talking about WAPO, I bet NAR would return their calls if the did some enterprising journalism.
Good thing for blogs because
"David, I would disagree. Was it deception for him to revise the forecast upward for 2004 and 2005? Economists are like weathermen, except they tell you yesterday's weather. "
ReplyDeleteNo. The problem is when Lereah later says that the revision was a 'bit worse' then anticipated when in fact the decline was over more then double what he anticipated in October.
This is deceptive. Due to his cheerleading and continuing deceptions Mr. Lereah cannot be trusted
ReplyDeleteI'll bring the tar. You bring the feathers.
I think the problem is that the NAR employs college interns who recently took their first Microsoft Excel course to provide this "comprehensive in-depth analysis".
ReplyDeleteThat, or they just make things up on the fly.
Either way, it's complete BS.
BREAKING NEWS - Median home prices in NOVA are down 8%, yes 8%, on a year over year basis for August.
ReplyDeleteSee MRIS.com for details!!!
This is way worse than even I, a super duper bubblehead, expected to happen so quickly.
Hate to steal your thunder john, but I said 5% down sf and 10% down condo last month.
ReplyDeleteva-
ReplyDeleteSpin spin. Sorry. Down is down.
OFFICIALLY DOWN 8% YOY!!!
crispy&cole
crispy,
ReplyDeleteI am not spinning anything. I think you have a reading comprehension problem. Reread my comment.
Down 8% YOY! I guess RE does go down!
ReplyDeleteExtremely interesting FACTS from the Federal Reserve.
ReplyDeleteNote that it is RENTERS who have by far the higher debt burden in the U.S.
www.federalreserve.gov/Releases/housedebt/www.federalreserve.gov/Releases/housedebt/
Not to sound elitist, but renters have always comprised the lower class and the lower-middle class.
ReplyDeleteIt is just a fact. The wealthy own land. Maybe this will change, but I highly doubt it.
Of course there are a few exceptions, but that is what makes the rule.
note, that should have been:
ReplyDeletewww.federalreserve.gov/Releases/housedebt
This comment has been removed by a blog administrator.
ReplyDeleteCondomania said...
ReplyDelete"I'm sorry, but economists revise forecasts all the time."
Lereah is not an economists.
Not to sound elitist...
ReplyDelete_________________________
Nevermind.
robert,
ReplyDeleteFor God's sake. His education is in Economics. Anyone with half-a-brain knows he is a paid mouthpiece. I am sure that he is not the only economist who got it wrong. Just look at those idiots on CNBC.
It does not serve his clients to get it wrong. This is their bread and butter.
crispy,
ReplyDeleteDo you ever have anything substanative to say?
Mighty brazen comments. I guess David has turned comment moderation off.
ReplyDeleteva_investor said...
ReplyDelete“For God's sake. His education is in Economics. Anyone with half-a-brain knows he is a paid mouthpiece. I am sure that he is not the only economist who got it wrong.”
So, which is it? Paid mouthpiece or economist?
both robert. Jeez.
ReplyDeleteva,
ReplyDeleteI bet it was nice for you as a child, with a silver spoon hanging out of your mouth. I guess "old money" spends just as well as hard earned money!
Lance said...
ReplyDelete“Extremely interesting FACTS from the Federal Reserve.
Note that it is RENTERS who have by far the higher debt burden in the U.S.”
Yaawwn, strrrrreeeeetch. Hummm . What’s on the hot sheets as we hit the weekend? Let’s see, Inventory up, foreclosures up, delinquency up; still have a few trillion dollars worth of ARM resets.
Oh yea, DC down 8.7% YOY. Locally, down over 8% YOY.
Have a great weekend folks, think I’ll do some fishin.
Did you see Loudon county? Down 14.22% YOY! Woo hoo!
ReplyDeleteRobert said:
ReplyDelete"Oh yea, DC down 8.7% YOY. Locally, down over 8% YOY."
So you're able to buy now? Why didn't you just buy then in 2004 before it went up 22% between 2004 and 2005? Wouldn't that have been a lot cheaper than the 8% down?
Hi all - I haven't posted in a while. I think all know my view on what I think the market is currently at, but I must defer to condomania.
ReplyDeleteEconomists do indeed revise their forecasts all the time - upwardly and downwardly. I don't think that NAR statement of using the adjective "slight" makes them a blatant liar - I think more than anything, it embarasses them, in that they don't have the competence and skill to predict the market.
David, you're on the right cause here, but you definately go off the deep end every now and then (recall your DEMAND to correct the website posting numbers of some sort). I can tell you're maturing so that's what matters.
But as you know, good job on this blog, judged by the steadily increasing posts that are counted.
va_investor
ReplyDeleteYou are truly an annoying poster - can you limit your postings and consilidate your thoughts?
Continuing Depections ...cannot be trusted.
ReplyDeleteCan the President be Mr. Lereah in disguise?
2006 prices, 2005 prices
ReplyDeleteArlington County Median Sold Price: $ 420,000 $ 490,000 - 14.29 %
Alexandria Median Sold Price: $ 440,000 $ 449,000 - 2.00 %
Fairfax Median Sold Price: $ 469,000 $ 500,000 - 6.20 %
Loudoun Median Sold Price: $ 486,500 $ 506,100 - 3.87 %
Prince William Median Sold Price: $ 375,000 $ 395,000 - 5.06 %
Please no spin on these numbers. 14% is UGLY!
ReplyDeleteDavid, median DC proper prices down over 8%!
ReplyDeleteLance said...
ReplyDelete“So you're able to buy now?”
I was able to buy a year ago. I was able to buy 6 months ago. I am able to buy now.
Now go spruce up that basement apartment for your future bitter renter. Gotta get that thing rented out man! Your equity is on the line here! Hey, since DC dropped 8.7% are you gonna have to jack up the rent?
Don't mean to threadjack, but I came across this paragraph on the Wikipedia entry for the Great Depression. I almost have to wonder if a bubblehead wrote it?
ReplyDelete"Macroeconomists, including Ben Bernanke, have revived the debt-deflation view of the Great Depression originated by Arthur Cecil Pigou and Irving Fisher. In the 1920s, the widespread use of the home mortgage and credit purchases of automobiles and furniture boosted spending but created consumer debt. People who were deeply in debt when a price deflation occurred were in serious trouble—even if they kept their jobs—and risked default. Indeed, prices and incomes fell 20-50%, but the debts remained at the same dollar amount. As the debtors tightened their belts, consumer spending fell, and the whole economy weakened. With future profits looking poor, capital investment slowed or stopped. In the face of bad loans and worsening future prospects, banks became more conservative. They built up their reserves, which intensified the deflationary pressures. The downward spiral sped up. This kind of self-aggravating process may have turned a 1930 recession into a 1933 depression."
warmblanket,
ReplyDeleteInteresting post on the events leading to the Great Depression. As the great fear at the moment is that we are starting to see rampant inflation, how do you see a sudden shift to the deflation discussed in the article occuring here and now under foreseeable conditions?
I don't claim to be an economist but I have read from a few that deflation could be the real threat. This article talks about how, in an unprecendeted move, restaurants are lowering prices or offering more food for the same price, in order to stimulate lagging sales.
ReplyDeletehttp://globaleconomicanalysis.blogspot.com/2006/08/psychology-of-deflation.html
I guess that is how I would see deflation occuring.
warm,
ReplyDeleteIf we see deflation it could portend a depression.
OFFICIALLY DOWN 8% YOY!!!
ReplyDeletewow. That was quick.
To think, as you predicted well before I, that this really doesn't get started until 2Q2007. I did think DC was further behind Florida and California, not trying to pull up to Boston. Seriously, this is going to be a national event.
By va_investor:
If we see deflation it could portend a depression.
Hey, I get to play the optimist now! I think we'll see deflation by the 1970's definition of inflation. But right now, we focus on the "core." The core is 40% commercial rents, and those look to be flat to up for a bit. Not a lot up...
But also look at the spike in import prices. :( The "free lunch" is over. We'll have some inflation. for me, all that matters is do my assets do better than housing, for I will buy in a few years. :)
Also va_investor: Not to sound elitist, but renters have always comprised the lower class and the lower-middle class.
And quite a few others. But do recall, its a bufucated market. You have a huge number of six figure couples who feel "priced out" or cannot see the economic sanity of buying. I'm not the only one at work who has done the calculation:
In a sane housing market, one can expect to come out ahead *buying* over renting about the original purchase price of the home in 30 years.
In today's market, my most optimistic calculation shows the renter coming out ahead at least half the home's value after 30 years. :( Thus, the bubble.
Many of the other renters are students, just out of college, or the 26% of the population too close to the poverty line to qualify for credit (like a mortgage).
Lance said: So you're able to buy now? Why didn't you just buy then in 2004 before it went up 22% between 2004 and 2005? Wouldn't that have been a lot cheaper than the 8% down?
And it will be a lot cheaper in a year. The only question is how many years of equity gains are about to be given up.
So much for your previous comments about there never being a bad time to buy real estate. Recommending to buy a home now is like Cramer when he recommended tech stocks at the Nasdaq going down through 4000... Look at the funamentals. Nondimensionalize any housing variable versus historical standards and its far too obvious how out of whack the market is.
Neil