Again with the NAR

In an article earlier today, I pointed out that the National Association of Realtors is sounding desperate these days. The 6% home-sale skimmers are taking pains to make housing look like a good "investment," even though the NAR's own predictions call for a worsening market. In its latest press release, NAR Chief Economist Lawrence Yun, the trade group's new and improved David Lereah, tries to argue that homes are better investments than stocks. I won't take too much time to point out how specious his argument is, beyond pointing out that stocks, unlike homes, operate on a highly liquid market.

Moreover, they pay dividends, they don't require thousands of dollars in yearly maintenance and property taxes, and finally, let's note that Yun's bogus return rate for housing depends entirely on the leverage people use to buy homes. Buying stocks with major leverage would boost returns far beyond the alleged payoff from a home. But that, of course, would be a risky thing to do -- just like buying an expensive home at the top of a market with no money down and an ARM, as so many Americans did over the past couple of years.

Numbers don't lie, unlike the writers of some press releases

But back to the NAR's numbers. The organization that thinks it's always a great time to buy nevertheless doesn't seem to feel like it's ever a good time to put its sales predictions in context.

I'm here to help the NAR out, and by "help," I mean "illustrate, in the NAR's own words and figures, how the trends in its predictions makes its look downright ridiculous." Let's start with existing home-sales predictions.

Estimated 2007 Sales Diff. From Prior Month Difference From January Prediction Difference From Prior Year NAR Spin January 6,420,000 (0.93%) Gradual Rise Projected for Home Sales February 6,440,000 0.31% 0.31% (0.62%) Existing-Home Sales To Improve, With Later Recovery for New Homes March 6,420,000 (0.31%) 0.00% (0.93%) Housing Recovery Likely This Year, but Timing Isn't Clear April 6,340,000 (1.25%) (1.25%) (2.16%) Tighter Lending Standards Good for Housing, but Will Dampen Sales May 6,290,000 (0.79%) (2.02%) (2.93%) Housing Forecast Changed Slightly Due to Impact From Tighter Lending June 6,180,000 (1.75%) (3.82%) (4.63%) Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn July 6,110,000 (1.13%) (4.83%) (5.71%) Home Prices Expected to Recover in 2008 as Inventories Decline August 6,040,000 (1.15%) (5.92%) (6.79%) Near-Term Home Sales to Hold in Modest Range September 5,920,000 (1.99%) (7.79%) (8.64%) Mortgage Problems to Dampen Home Sales in The Short Term October 5,780,000 (2.36%) (9.97%) (10.80%) Improvement in Mortgage Market Bodes Well for Housing in 2008 November 5,670,000 (1.90%) (11.68%) (12.50%) Modest Recovery for Existing-Home Sales in 2008 as Credit Crunch Subsides

Hmmm. How's that for an investment opportunity? Lever up with a risky mortgage, and then enter a market where the supposed "experts" continually drop their sales predictions, which now stand at a 12.5% drop from last year's actual sales, and 11.7% below what the NAR cheerleaders expected in January.

From ugly to fugly

Things look even worse for new-home sales. Here's what the NAR's constantly shifting story there has looked like.

Estimated 2007 Sales Difference From Prior Month Difference From January Prediction Difference from Prior Year January 957,000 (8.86%) February 961,000 0.42% 0.42% (8.48%) March 950,000 (1.14%) (0.73%) (9.52%) April 904,000 (4.84%) (5.54%) (13.90%) May 864,000 (4.42%) (9.72%) (17.71%) June 860,000 (0.46%) (10.14%) (18.10%) July 865,000 0.58% (9.61%) (17.62%) August 852,000 (1.50%) (10.97%) (18.86%) September 801,000 (5.99%) (16.30%) (23.71%) October 804,000 0.37% (15.99%) (23.43%)

Again, this should come as a surprise to no one who's followed the problems at builders such as Centex (NYSE:CTX) , Ryland Group (NYSE:RYL) , or Toll Brothers (NYSE:TOL) . Houses aren't selling like they used to, nor are they getting the prices they used to. That's because lenders such as Countrywide Financial (NYSE:CFC) and IndyMac Bankcorp (NYSE:IMB) aren't spreading subprime and Alt-A loans out the way they used to. Peers such as Novastar Financial (NYSE:NFI) and Impac Mortgage Holdings (NYSE:IMH) have pretty much pulled the blinds and given up.

Foolish final thought

So there's no glut of low-end money to keep pushing prices up, which means the end of the great housing Ponzi scheme of this decade. The builders know it. The banks know it. Even the NAR knows it. Just don't expect them to explain it to you in plain English, as these tables do. Straight talk is bad for Realtors' pocketbooks.