Home sales weak, but Realtors see a rebound

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So which is it? Is the housing market in such a terrible state that it needs an epic rescue plan from the federal government?

Or is it on the brink of turning around, as the National Association of Realtors argues today, even while issuing another crummy report on home sales?

From AP: ‘Sales of existing homes fell to the lowest level in nearly a decade in January while the median price for a home dropped for the fifth straight month.

More: ‘The National Association of Realtors said today that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units, the slowest sales pace on records going back to 1999.’

The NAR reports the level of sales is down 23.4% from last January’s level.

Now the positive NAR spin: The ever-optimistic Lawrence Yun, chief economist for the Realtors, continues to see light at the end of the tunnel -- he sees better days ahead later this year: ‘As the increased limits for FHA and conventional loans are implemented, more buyers will have access to safer FHA loans and lower interest rate loans in high-cost areas, which could lead to steadily higher home sales later in the year.’

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach also predicts a bounce-back in sales later this year in high-cost areas such as California: ‘Once buyers have greater access to higher loan limits, it will take a few months for increased shopping activity to translate into higher sales,’ Gaylord said. ‘We should see some movement of pent-up demand by this summer, but higher loan limits need to be implemented fully and promptly to have maximum benefit.’

The NAR has been wrongly making similar predictions for quite a while now. Eventually, the market will bottom and the NAR will be correct in its optimism. Eventually could be a long while from now. Or, to quote one of my favorite Wall Street aphorisms, ‘If you’re wrong for long enough, you’re wrong.’