Pending home sales in May – third-lowest reading on record
The National Association of Realtors just reported that pending sales for existing homes fell 4.7% in May 2008. This marks the third lowest reading on record in May.
Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.
"The overall decline in contract signings suggests we are not out of the woods by any means," NAR Chief Economist Lawrence Yun said in a statement. San Diego California real estate blog
Nation Association of Realtors Antitrust Settlement
The federal antitrust lawsuit, which alledged the National Association of Realtors policies unethically restricted competition and consumer choice, finally came to a proposed settlement this week. The proposed change set forth by NAR would change it's existing heavy online listings restrictions.
In a quote from the Department of Justice, "Many local MLSs adopted NAR's (VOW) policy before NAR suspended its policy during the department's investigation," and in one market area in Kansas "all brokers withheld their listings from the one VOW in the community, which was then forced to discontinue its popular Web site."
In response to the settlement, NAR president, Richard Gaylord, said, "This is clearly a win-win for the real estate industry and the consumers we serve."
Does the National Association of Realtors really need an economist?
I've been a member of the National Association of Realtors (NAR) for over 30 years and I'm hard-pressed to remember the Association forecast being anything but overly optimistic.I'm also a member of the San Diego Association of Realtors and the California Association of Realtors. I have nothing against realtor associations but I do have an issue with these associations putting out an economic forecast. How can any forecast done by an economist who is an employee of a trade association, whose mantra is “It's always a good time to buy real estate," possibly put out an accurate forecast for real estate trends if those trends are anything other than positive.So is the association actually benefiting, or for that matter, providing proper guidance to the general public by issuing continued rosy forecasts.
Only occasionally are the forecasts sprinkled with a milk-toast opinion of possible market slowing.The real estate-buying public is becoming more sophisticated and is able to access multiple sources of information through the Internet. It's my opinion that the constant overly optimistic outlook of the National Association of Realtors’ chief economist is making the association and all its members look foolish to say the least.
In February of 2005, then NAR chief economist Mr. Lereah published a book with an exceedingly long title. This book is titled: “Are you missing the real estate boom? The boom will not bust and why property values will continue to climb through the end of the decade — and how to profit from them.” Shortly after the publication of this book, many real estate markets including San Diego's, took a decidedly downward trend which has continued through to today.NAR’s December 2005 forecast for 2006 said existing home sales would fall 3.7% and new home sales would fall by 4.8%. What actually happened, from data released in December 2006, existing home sales fell 8.6%, more than twice the NAR is forecast, and new home sales fell 17.8%, which was almost 4 times more than the predicted forecast.
In December 2006 the chief economist for the NAR said: “Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards.” It was stated in this report that existing home sales were expected to be off 1% and new home sales to fall 9.4%. What actually occurred for 2007 was that existing home sales took a fall of 12.3%, and not the 1% predicted by the NAR. New home sales were down about 25%, again, off from the original 9.4% decline projected by the National Association of Realtors.
Now for 2008, the NAR is projecting existing home sales will rise very slightly, and the median home price should also rise. Also projected is that new home sales will continue to fall sharply in the range of about a 12% drop. The report also speculates that for the largest part of the market, existing home sales, the bottom has come, and 2008 will be a turning point.
Is the NAR's current projection, likely to occur? With the Fed dropping interest rates hand over fist, I think there is a 50-50 possibility that finally NAR’s forecast may be close to reality. If the housing market numbers for 2008 come anywhere close to NAR’s projection, will it vindicate the necessity for the association having an economist on staff? To me it's kind of like a broken clock; it will be correct at least twice during a 24-hour period.
Personally I believe the NAR should leave the forecast up to the government and the Wall Street economists and just report the actual housing numbers. Let's face it; it's not always a good time to buy real estate. Let's try to enhance the general public’s perception of Realtors by sticking to the facts, and leaving the projections and forecast to others. San Diego California Realtors