The Big Picture

Pundit Pile-on: NAR's David Lerah

Tuesday, January 30, 2007 | 05:30 AM

in Data Analysis | Financial Press | Real Estate

Last week, we noted the absurdity of the housing commentary by the oft hallucinatory David Lereah (Existing Home Sales Are Fantastic!). It was a pundit pile-on: Marketbeat compared Lerah to Baghdad Bob, Minyanville noted "Existing-Home Sales Continuing to Stabilize In Terms of Plummeting."

But you may have missed (it was late in the day) the biggest takedown of the lot: Marketwatch's Rex Nutting went postal on Lereah. Not via clever or snarky language (the way the rest of us hacks did), but with actual data -- and even more damning, with Lerah's own words.

Nutting writes: "Here's what Lereah was saying throughout 2006 and into 2007, and what the market was doing:"

January 2006

Lereah's forecast: "The market is in the process of normalization."

Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.

Lereah's post-mortem: "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead."

April 2006

Lereah's forecast: "Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau."

Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.

Lereah's post-mortem: "This is additional evidence that we're experiencing a soft landing."

July 2006
Lereah's forecast: "The market should even out just below present levels."

Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.

Lereah's post-mortem: "The market is stabilizing."

October 2006

Lereah's forecast: "We expect sales activity to pick up early next year."

Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.

Lereah's post-mortem: "This is likely the trough in sales."

January 2007

Lereah's forecast: "The good news is that the steady improvement in sales will support price appreciation moving forward."

Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.

Lereah's post-mortem: "It appears we have established a bottom."

It's not that Lereah is a bad economist; that's not even his job. Rather, his responsibilities are to use the tools of the economic profession, and apply them to shill for the NAR, a trade organization. After all, as Nutting notes, "there are two universal truths at the National Association of Realtors: 1) It's always a good time to buy or sell a home; and 2) We've seen the worst of the housing market correction."

Source:
Realtors' economist stayed sunny all year
Commentary: David Lereah saw bottom in first quarter, second quarter ...
Rex Nutting
MarketWatch, 5:31 PM ET Jan 25, 2007
http://tinyurl.com/2kdog5

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Comments

Interesting point about vacancy rate of owner occupied housing, which has increased to 2.7% from 1.8% in 2004: http://www.prospect.org/deanbaker/2007/01/housing_vacancy_rate_hits_new.html#015279

Posted by: Jay L | Jan 30, 2007 8:36:42 AM

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