Former Fed Chairman Greenspan, even while out of office, seems to still speak for the US housing market these days when he announced in a May 18th speech [Matrix] that the the housing boom was over.
Two weeks later, the NAR concured. They acknowledged that the housing boom was over in their press release of June 6th Home Sales Settling Down and Appreciation Slowing [NAR].
When I read the release on June 6th, I was really dissappointed since the NAR should be a leader on housing market issues, not simply provide a politically correct response when they are forced to. There has been endless rhetoric and spin on the data that they have been releasing over the past 6 months and frankly, I didn’t have the energy to comment on it. Now that I have had time to consider it, I am very annoyed. The quotes in the release are in stark contrast to what had been said to date.
The housing boom has ended but sales at historically healthy levels will continue, and price appreciation will return to normal patterns across much of the country, according to the National Association of RealtorsÂ®.
David Lereah, NAR’s chief economist, said home sales are settling into a slower pace. “In recent years we were occasionally challenged to find appropriate superlatives to describe surprisingly high home sales,” he said. “Now the housing market has cooled, but 2006 is still expected to be the third strongest on record. In this case, experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability. But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable.”
I think NAR has been worried that any admission of market weakness would indicate that a crash was looming. Hence David Lereah’s classic quip [Matrix]:
Do you think the housing market could ever crash? I’m getting tired of all these doomsayers. We live in houses, and our houses are not going to crash.
Yet it was another missed opportunity to reconnect with the public and does more damage to their credibility. Leadership on this issue would have been a whole lot cheaper than a new ad campaign. The last one focused on how brokers were interconnected with their community and follow a code of ethics.
As the housing market cools and membership drops (probably quite sharply over the next two years) from attrition due to lower sales volume, lets hope that the NAR leadership becomes interconnected with the American public again. They have access to and publish a lot of great data, which should mean they are more on top of whats happening than their press releases seem to show.