Here Comes 'The Market Adjustment'

The National Association of Realtors issued a news release today in which NAR Chief Economist David Lereah characterizes bad December sales figures as "the market adjustment we've been discussing, with a soft landing in sight for the housing sector."

The Associated Press noted a milestone that NAR did not. As stated in the AP story, the December numbers "marked the third consecutive monthly decline, something that has not occurred in more than three years."

Here's an exceprt from the NAR news release:

Existing-home sales declined in December but easily set an annual record, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 5.7 percent to a seasonally adjusted annual rate1 of 6.60 million units in December from an upwardly revised pace of 7.00 million in November. Sales were 3.1 percent lower than a 6.81 million-unit level in December 2004.

There were 7,072,000 existing-home sales in all of 2005, up 4.2 percent from 6,784,000 in 2004. This is the fifth consecutive annual record; NAR began tracking the sales series in 1968.

David Lereah, NAR’s chief economist, expected the monthly sales decline. “This is part of the market adjustment we’ve been discussing, with a soft landing in sight for the housing sector,” he said. “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead. Overall fundamentals remain solid, driven by population and employment growth as well as favorable affordability conditions in most of the country, so we expect the housing market to remain historically high but lower than last year’s record.”

— The Boy in the Big Housing Bubble