NAR Predicting Home Prices To Drop This Year

The National Association of Realtors (NAR) is predicting home prices to drop in 2007. In an article from CnnMoney.com writer, Les Christie:

Home prices are expected to finish down for the year, the National Association of Realtors (NAR) said Tuesday, which would mark the first drop since the group started tracking values in 1968.

NAR projects a 1 percent decline in the median price of an existing single-family home, to $219,800. The group, in a forecast made a month ago, had previously been expecting a 0.7 percent decline. Prior to that, it had expected a gain of 1.2 percent.

I wonder if these new predictions have anything to do with the resignation of David Lereah, the NAR Cheif Economist.  David Lereah’s predictions over the last seven years seemed like a crap shoot to me at times. NAR’s predictions were either over estimated or under. I’m not an economist, but I play an armchair economist on this blog. I am great at second guessing.

In the article Walter Molony, a spokesman for NAR, suggests though that,

“The statistics may exaggerate the drop because sales have slowed more in high-priced areas than in moderately-priced ones.”

What does this mean for Madison and Dane County home prices? Very little. Real estate is local, like the weather. It doesn’t matter what the weather is like in Austin, Texas if you are planning a picnic in Madison, Wisconsin.