NAR’s March Release: Is the Media Too Positive this Time??

Sorry to play the contrarian again, but why all the hoopla over NAR’s release this week?  Was the news really good enough to elicit a “wow“?

Believe me, after absorbing one ugly headline after another (both fair and unfair) for years now, the industry could certainly use a positive spin.  Like many others, I felt that the media practically reveled in reporting bad news while too often failing to expand on the whole story or even report on the positives.  This time around, though, I must be missing something because I just don’t get why this is the month when the figures are being trumpeted as the possible first signs of a turnaround.

So pardon me if I’m flying against the happy winds when I think February was barely different than prior months; as before, I see in the numbers reasons to be both cautious and cautiously optimistic.  But I sure ain’t ready to call this yet.

Let’s look at a few key facts:

  • Fewer transactions, dropping price.  Nationally, there continues to be a decrease in both the number of transactions (or “sides”) and price.  Don’t get caught comparing one month versus the prior month as seasonality trends will cloud things; look at the same month in the prior year.  Yes, both sides and price in February were better than January.  That’s almost always the case in good times and bad.  Look at the relevant data: the 280,000 sides closed in February ’09 were 10{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} less than February ’08 (312,000) and the price was off considerably (-13.4{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} or -15.5{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}, depending on whether you’re looking at mean or median average).
  • Rate of Price Decline Slowing? I’d argue that the jury is still out here.  February’s price was higher than January’s both nationally and in all four regions.  It was also down against February of ’08 both nationally and in all four regions.  Now I’m certainly happy that the rate of decline has slowed in all regions but it’s only a one-month change so I’m not ready to call that a trend.  It simply means that, so far, for one month we’ve been falling slower.
  • Ten Months of Inventory.  This figure has held steady now for three straight months.  That’s good.  But at 9.7 months of inventory, there are still a whole lot of listings to burn through before things return to a more “normal” six months.  That means that in many markets there will continue to be price pressures.
  • Most Brokers’ Revenues Are 39{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} Off Peak.  Multiply sides and mean price and you get sales volume, a pretty close gauge of a company’s revenues.  Most companies have annualized sales volume that is way, way off where they were about three years ago.  The best markets are now holding steady.  In all four regions but the West (which has held steady for eight straight months) we continue to see deterioration in the trailing twelve months’ sales volume.  The region that’s fallen the least off peak is the Northeast, which is “only” down 30{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c}; the West is 44{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} off its peak.

On the one hand, I’ll take any positive reaction from the media I can get.  On the other, I refuse to get caught up in the hoopla and ignore the real numbers.  And you know what?  The last thing we need right now is for a bunch of us, most notably the government, suddenly thinking all is dandy with housing.

Keep rowing hard and you’ll get through the storm, but don’t relax yet; I’m sure there are stiff winds ahead.

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