Saturday, November 11, 2006

“Coasting” Into 2007


On Friday, the National Association of Realtors released its annual forecast for home sales and prices in 2008 displaying, yet again, the group’s total inability to accept the realities and severity of the nations housing bust.

"Given the huge gains in home values during the housing boom, and this year’s rise in housing inventory, overall price gains this year and next will be modest," said David Lereah, NAR’s chief economist.

Lereah goes on to make the following predictions for 2008:

  • Existing-home sales (for all home types) will drop 0.6% to 6.43 million.
  • New home sales will drop 8.7% next year to 975,000.
  • Total housing starts will decline 11.8% to 1.63 million..
  • The national median existing-home price will increase 1.7% to $227,500.
  • The median new-home price will increase 1.3% to $241,400.
LAST YEAR, Lereah offered this sentiment along with the following predictions:

"The slowdown amounts to a tapping of the brakes on a hot market,… Home sales are coming down from the mountain peak, but they will level-out at a high plateau -- a plateau that is higher than previous peaks in the housing cycle. This transition to a more normal and balanced market is a good thing."

Lereah’s stated predications for 2006 made in November 2005:

  • Existing-home sales (for all home types) will drop 3.7% to 6.84 million.
  • New-home sales will drop 4.8% to1.23 million.
  • Total housing starts will decline 4.8% to 1.92 million.
  • The national median existing-home price will increase 6.1% to $221,400.
  • The median new-home price will increase by 7.3% to $250,100.
As you can see, Lereah shows a tendency to be a bit flamboyant in his predictions.

With 10 months of 2006 now accounted for, look at the following projected (since October-December has not yet been reported) actuals for 2006:

  • Existing-home sales (for all home types) dropped 8.5% to 6.47 million. Lereah off by 4.8% (reader Dave Barnes sees it as 229%).
  • New-home sales dropped 16.8% to 1.07 million. Lereah off by 12% (reader Dave Barnes sees it as 350%).
  • Total housing starts dropped 10.6% to 1.85 million. Lereah off by 5.8% (reader Dave Barnes sees it as 220%).
  • The national median existing-home price increased 1.9% to $223,700. Lereah off by 321%.
  • The median new-home price dropped 1.1% to $238,400. Lereah off by 8.4% (reader Dave Barnes sees it as 1033%).
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