Tuesday, April 08, 2008

NARcasting The Future: April 2008

Today, the National Association of Realtors (NAR) provided their latest estimate of annual existing home sales for 2008 leaving their prior “beginning of year” estimate unchanged at a 4.9 million unit annual sales pace and increasing their estimate for the “end of year” annual sales pace to 5.9 million units resulting in total year sales of 5.39 million units.

As I had noted last month, this type of “beginning year”-“end of year” reporting which in prior months estimated first and second half of the year sales pace and now estimates first and last quarter sales pace will probably be discontinued shortly as NAR goes back to stating only their total year sales estimate but for now I will chart all predictions.

Note that in this month’s chart I simply broke out each prediction and connected them to the 2007 year end result so as to best capture the flow of predictions.

As usual, the latest forecast comes with another dose of truly ridiculous spin.

In an effort to put their absurd bias into perspective I compiled all their existing home sales forecasts for 2007 and now 2008 into a chart along with a list of prominent quotes supplied with each forecast.

12/11/2006 Prediction: 6.40 million units.
Lereah "Most of the correction in home prices is behind us."

1/10/2007 Prediction: 6.42 million units.
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007 Prediction: 6.44 million units.
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007 Prediction: 6.42 million units.
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007 Prediction: 6.34 million units.
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

Lereah Leaves NAR for Move.com

5/9/2007 Prediction: 6.29 million units.
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007 Prediction: 6.18 million units.
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007 Prediction: 6.11 million units.
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

8/8/2007 Prediction: 6.04 million units.
Yun “With the population growing, the demand for homes isn’t going away – it’s just being delayed.”

9/11/2007 Prediction: 5.92 million units.
Yun “Patient buyers in most areas who do their homework will recognize that housing remains a good long-term investment.”

10/10/2007 Prediction: 5.78 million units.
Yun "The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

11/13/2007 Prediction: 5.5 million units.
Yun "In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment… 2007 will be the fifth best year for housing on record"

12/10/2007 Prediction: 5.67 million units in 2007, 5.7 million units in 2008.
Yun "The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007."

01/08/2008 Prediction: 5.66 million units in 2007, 5.7 million units in 2008.
Yun "A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."

02/07/2008 Prediction: 4.9 million units in H1, 5.8 million units in H2, 5.38 million units full year.
Yun "Where builders have cut construction sharply, and in most areas with improving affordability conditions, we’ll generally see moderately higher home prices."

03/06/2008 Prediction: 4.9 million units in H1, 5.8 million units in H2, 5.38 million units full year.
Yun "Significant price declines in some local markets have sharply and quickly improved local affordability conditions, and are inducing buyers to return to the marketplace"

04/08/2008 Prediction: 4.9 million units in Q1, 5.9 million units in Q4, 5.39 million units full year.
Yun "Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year"


  1. Dagger12:28 PM

    So 5.66 million units were sold in 2007. And they started the year estimating 6.40 million. And they're starting 2008 estimating estimating about 5.4 million, so maybe that means we'll end up at 4.7 million by the end of 2008.

    Of course price matters more than volume to most people. And if prices really do start to find realistic levels then maybe volume will pick up a little. What was the volume before the bubble started (2002 maybe)?

  2. [Sarcasm]Why so hard on the NAR? You know how much sales pick up in October thru December.[/Sarcasm]

  3. Dagger,

    This year will be interesting.. I think the recession will trim more sales than many are anticipating.

    I'll have to look at the annual sales going back to 2000 for camparisons sake.. I'll see if they publish that data.


    HA! ... the industry better book a good number of sales in April - June because after that... its all down hill.

  4. Dagger4:50 PM

    You've got me thinking about this year's sales volume. I believe you've presented data that Jan and Feb sales (number of units) are about 20% lower than a year before. If that continues then we'll end up with 4.5 million units sold in 2008 (80% of 5.66).

    That's grim. But it's consistent with what appears to be an accelerating decline.

  5. Dagger,

    Yes I think possibly even a bit lower... I'm working on an estimate.

    Ill see if I can post it tomorrow you can check over the math but I think it is possible that the full year sales are close to 4.5 million or possibly even lower.

    The key of the NAR prediction is that the new Jumbo "conforming loan limits" will actually increase sales but I think that is wishful thinking on many levels so if you really don't see any uptick but in fact, actually see a continued deceleration because of the recession sinking its teeth in, you may end up below 4.5 million this year...

  6. Anonymous8:06 PM

    Have you looked at the details of the new housing bill? There is a loss carry back that allows the financial firms to take this years enormous write downs and apply to the fat bubble years they were already taxed on to get taxpayer money to help them cover current losses. Its refreshing to know that Dodd, CLinton, Kerry etc. are not communists, but simply poor corrupt officials.

  7. Anonymous8:53 PM

    If NAR says the market is so wonderful then why are they asking for a bailout?

    NAR speaks out of both sides of their mouth. These rosy statements they make should be sent to Congress along stating that the largest trade group of Realtors say there is no housing crisis.

  8. Anonymous8:55 PM

    If NAR says everything is so wonderful, then why are they seeking a bailout?

    NAR speaks out of both sides of their mouth. No bailout.