NAR: 2007 will be 2002Posted on Monday, December 10th, 2007 at 9:59pm.
Nationally, the National Association of Realtors expected 6.44 million units to be sold in 2007, just a tick below the 6.48 million of 2006. But as we know, NAR's forecast is a moving target (hey, at least they try!) and their newest revision of the 2007 estimate is 5.67 million units, or 12% slower than expected.
Given the strangeness of 2007, being off by 12% doesn't seem so bad.
Meanwhile, blogger Calculated Risk is too modest to admit it, but he all but hit the nail on the head eleven months ago. CR wrote in his forecast (click to read it) that sales in 2007 would "surprise to the downside, perhaps in the 5.6 to 5.8 million unit range."
Perhaps?!? How about exactly? Here's a tip – don't get caught up in a game of horseshoes with CR.
Alas, CR had an unfair advantage... he's been expecting the mortgage meltdown for some time. In this case, we'll discount luck as an explanation of his getting that right, too.
What's in store next year?
Uh-oh, the NAR is simply looking for a repeat of 2007 – 5.70 million units next year, actually a tick up (+30,000 sales) from 2007. Given the storm clouds that seem to be gathering, that's awfully cheery.
NAR notes that the 2007 sales figure will come in as "fifth highest on record." Of course, all the other 4 highest years were recent boom years. The closest number to what's expected for 2007 was 2002's sales at 5.632 million. All the more reason, we'd think, for guessing lower as we enter a down year, unless you just don't believe a down year is coming in 2008. Maybe that's NAR's message.
CR notes that if 2008 were to be just an average year, in line with the 40-year median percentage of sales of owner-occupied homes, we'd expect to see 4.6 million sales, or 19% fewer than NAR projects.
No question, interest rates for those who want to buy now – and can qualify – are great. The credit markets are tightening, though, and in light of The Freeze, we're not sure how many more creative loan products are going to be offered. After all, this president or the next may want to step in and help rewrite the terms later. A grim mood and tighter money suggest a bad year.
We're aware of the dangers of prognosticating, but in the office pool, MBC's in for a below-historical-average year, meaning < 4.6m sales nationally.
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