On Monday NAR released their Existing Home Sales stats for July 2007 slipped only 0.2% from the same period last year.

>Lawrence Yun, NAR senior economist, said the market is holding on despite temporary mortgage disruptions. “Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months,” he said. “Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.

I believe this could fall under normative economic theory (just a wild guess…on my part). When the data doesn’t match what the author wants it say, the author says what the author wants to say anyway. Another word for this is known as “Fogging.”

Other examples…

June 2007 Release for Existing Home Sales – Psychological factors and people doubling up in their houses:
>”I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers,” he said. “Household formation has slowed dramatically since late 2006, implying that many people are doubling-up – they’re adding roommates or moving in with parents.”

April 2007 Release for Existing Home Sales – The weather is to blame:
>David Lereah, NAR’s chief economist, expected the drop. “For the last couple months we’ve been expecting a weather ‘hit’ on home sales finalized in March, but looking at overall activity in the first quarter we see that existing home sales averaged 6.41 million — a figure that is moderately higher than the sales pace during the second half of 2006,” he said. “We also may be seeing some losses as a result of the subprime fallout. However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers.”

Ok, back to the August release…

The reason Yun gave as to why home sales prices didn’t rise in August… was due to the credit crunch. However, the July closings in this report didn’t include sales during or after the credit crunch began in mid-July because these sales went to contract in June or early July. In other words, the statement applied to conditions not evident in the report data.

Its an interesting argment but made subject to an error in time slicing. The comment would have made more sense next month. Why is this sort of thing said nearly every month? Its not fair to the consumer.


  1. John K August 30, 2007 at 10:20 am

    This guy must stay up late at night, thinking of new things to say that will make everyone break out in laughter.

    Here’s a quote from him, in this month’s Realtor magazine:

    “Predictions are always risky, but I’m going out on a limb to say existing-home sales will improve markedly by the fourth quarter. Here’s why…”

    On what earth will this be happening????

    I miss Lehreah!

  2. David Bragg August 30, 2007 at 4:45 pm

    I would like to comment on the quote “I think psychological factors…” I also believe this is true. It is truly amazing what the media can do to our minds. Once they get rolling with something they know how to keep it rolling on down the hill with lots and lots of speed. It seems like every day I pick up the paper the real estate news is worse. I think everyone needs to be more positive and not give in so easily to the notion that the market is failing.

  3. The last guy with cash but no house August 30, 2007 at 10:01 pm


    Huh? I have been extremely positive since I realized that the market is really failing.

    Of course, I don’t participate in the market. I couldn’t afford to bid against people using “funny money” loans. I still think my mortgages should be in line with my income (and local rents).

    I hope the market finishes failing and goes back to the old lending standards.

  4. Buyer September 1, 2007 at 12:05 pm
  5. Cyprus property September 3, 2007 at 5:50 am

    Psychological factors and people doubling up in their houses , I do believed that it is one of the factors that contributes to the drag of housing market. I do hope media could not add more fuel to it considering that small issue coming from them could indeed create big impact to the whole world.

  6. Realtor Renter September 5, 2007 at 5:43 pm

    I like the idea of a positive attitude, we in the industry are being inundated with positive thinking from all internal sides, but eventually truth must will out. The slide in activity and prices is beyond the magic bullet definition, and will continue given the cyclical nature of the current pressures. Media may not be at fault so much as helping this inevitable process move more quickly, which means we stabilize more quickly. Personal opinion, in some areas prices have a ways to go yet, depending on the market segment and zip code. After all, all real estate IS local.

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