Today the National Association of Realtors (NAR) released their monthly estimate of existing home sales. The market was expecting a decline but the decline of 27% was far below the expected 10% decline. This, in turn, prompted another down day on Wall Street.
Fear has two parts: the logical part – caution, and the illogical part – panic. So what panicked Wall Street this morning? In the NAR Press release was this from NAR’s chief economist:
“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years.”
Yes, you read that right. NAR is projecting existing home sales this year to slightly exceed the 20 year annual average and to easily outpace the 30 year average. In a down economy, above average is bad? The report also noted an increase in housing prices.
Crude oil prices have fallen to a price near $70 but the price of a gallon of gas is 7 cents more than it was a year ago, showing that oil companies have seen a slight pickup in demand for gasoline.
The market is like a driver in a car with no rear view mirror. Shoulders hunched, head thrust forward over the steering wheel, the market focuses only on the mountainous gravel road that is the near future. When the market is rising, it discounts bad news as a small speed bump in the road up the mountain of riches. When the market is falling, it discounts good news as a small braking in the headlong rush into the valley of the poor.