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.”
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.