Lereah on February Existing Home Sales Report

The realtors said the supply of unsold homes also rose 5.2% in February to 3.03 million, close to the all-time record of 3.04 million set in 1986. The inventory represents 5.3 months supply, unchanged from January.

"This is a good soft-landing scenario," said David Lereah, chief economist for the real estate group. Price appreciation has slowed. Median prices are now up 10.6% year-over-year to $209,000.

"This is a tale of two cities," Lereah said. Sales have fallen by double-digit percentages in some of last year's hottest markets, such as Phoenix, Fort Lauderdale and San Diego, he said. But some of the most affordable markets are now heating up, he said, pointing to Indianapolis, Albuquerque and Houston.

"Fundamentals are still good," Lereah said. [ Marketwatch 03/23/06]

Lereah At New England Realtors Conference

“We have had five consecutive record years, and you can't sustain that forever,” David Lereah, chief economist for the National Association of Realtors, said at the New England Realtors Conference held in Boston yesterday. “2006 is a year to catch our breath.”

Lereah said predictions reported by some economists that a real estate bubble is on the verge of bursting are misleading.

“It's more like a balloon that inflates and deflates,” he said. “The air is coming out of the balloon, but the bubble is not bursting.”

Lereah said most local housing markets are healthy, though home sales in 2006 will likely not be as strong as in recent years. But sales could bounce back in 2007 and for the rest of the decade. ( Lowell Sun 3/21/06)

Lereah's Book & Opinion

The San Francisco Chronicle has this article about David Lereah's (cheif economist of the National Association of Realtors) new book and his opinions on the housing market:

But the doomsayers, Lereah says, are mistaken in their dire predictions. Their big mistake, he says, is basing their forecasts by comparing housing appreciation with income growth. Instead, he says, they should look at the percentage of mortgage debt as it relates to income.

Lereah says it would take a "perfect storm" to swamp the real estate industry. There would have to be a slumping economy, job losses, a large inventory and a significant increase in interest rates to create that storm. The closest and most recent example of that occurring, he says, is Boston, which lost 15 percent of its labor force in 1990 and '91.

He sees no such storm gathering in the distance. Instead, he sees a slight contraction in the real estate balloon throughout 2006 and a healthy expansion in 2007.

And that, he says, is more important than most people realize.

"The only way to build wealth, for 80 percent of Americans, is real estate. If the balloon bursts, then 80 percent of Americans will have trouble with retirement."