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September 10, 2007

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Reggie

From the Motley Fool:
http://www.fool.com/investing/general/2007/09/11/hiding-the-ugly-truth-about-housing.aspx

"New home sales predicted to drop by 24%. Existing by 9%. Will probably be worse."

Why do I say worse? Because the NAR's home-sales predictions have been as useful as ice skates in Iraq, and they don't tend to err on the conservative side. They're so wrong, so often, that I started tracking them in a spreadsheet, just to document the pain. (The last column documents the NAR's shameless headline spin.)


Existing Home Sales Estimates
Sales Estimate
Variation from 2006
NAR Spin

January
6.42
(0.93%)
"Gradual Rise Projected for Home Sales"

February
6.44
(0.62%)
"Existing-Home Sales To Improve, With Later Recovery For New Homes"

March
6.42
(0.93%)
"Housing Recovery Likely This Year, but Timing Isn't Clear"

April
6.34
(2.16%)
"Tighter Lending Standards Good For Housing but Will Dampen Sales"

May
6.29
(2.93%)
"Housing Forecast Changed Slightly Due to Impact From Tighter Lending "

June
6.18
(4.63%)
"Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn"

July
6.11
(5.71%)
"Home Prices Expected to Recover in 2008 As Inventories Decline"

August
6.04
(6.79%)
"Near-Term Home Sales to Hold in Modest Range"

September
5.92
(8.64%)
"Mortgage Problems to Dampen Home Sales in The Short Term"


And while the NAR's craftily hidden doom and gloom bodes ill for millions of American home flippers stuck in bad mortgages, it looks just as ugly for homebuilders like Pulte Homes (NYSE: PHM), Hovnanian Enterprises (NYSE: HOV), Beazer Homes (NYSE: BZH), Ryland Group (NYSE: RYL), Toll Brothers (NYSE: TOL), Centex (NYSE: CTX), and all the rest. Here's how the NAR's ever-dwindling predictions for new-home sales stack up with last year's total of 1.05 million homes.

And while the NAR's craftily hidden doom and gloom bodes ill for millions of American home flippers stuck in bad mortgages, it looks just as ugly for homebuilders like Pulte Homes (NYSE: PHM), Hovnanian Enterprises (NYSE: HOV), Beazer Homes (NYSE: BZH), Ryland Group (NYSE: RYL), Toll Brothers (NYSE: TOL), Centex (NYSE: CTX), and all the rest. Here's how the NAR's ever-dwindling predictions for new-home sales stack up with last year's total of 1.05 million homes.

New Home Sales Estimates
2007 Estimate
Variation from 2006

January
957,000
(8.86%)

February
961,000
(8.48%)

March
950,000
(9.52%)

April
904,000
(13.90%)

May
864,000
(17.71%)

June
860,000
(18.10%)

July
865,000
(17.62%)

August
852,000
(18.86%)

September
801,000
(23.71%)


The rosy-lensed NAR predicts even sadder new home sales for 2008, at 741,000 units, or a 29% drop from 2006.

If the ever-optimistic NAR is predicting that kind of slowdown, I think it's going to be worse. We can only hope that it will be a much longer time before people are fooled into believing that housing is an "investment."


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quail hill

this is not the analysis generally performed by the experts who get cited in the media. In times of irrational exuberance, these experts are often among the most exuberant.

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