Likely the Bottom or Hopefully the Bottom?

The National Association of Realtors (NAR) seems intent on "willing" the real estate industry back to life. In today's press release, the headline strikes an optimistic tone.

Fourth Quarter Metro Home Prices & State Sales Likely Have Hit Bottom

It's not until four paragraphs into the report that readers learn chief economist David Lereah is a bit less certain, characterizing the fourth quarter as "hopefully" the bottom.

WASHINGTON, February 15, 2007 - Existing-home sales in most states were down from year-ago levels in the fourth quarter, marking the likely bottom for the current housing cycle, while prices in many areas corrected as a result of sellers’ willingness to negotiate, according to the latest quarterly surveys by the National Association of Realtors®.

Total existing-home sales including single-family and condo, were at a seasonally adjusted annual rate (1) of 6.24 million units in the fourth quarter, down 10.1 percent from a 6.94 million-unit level in the fourth quarter of 2005. Even with the general decline, six states showed increases in the sales pace from a year ago and one was unchanged. Complete data for three states were not available.

In the fourth-quarter, metro area single-family home prices, examining changes in 149 metropolitan statistical areas, (2) show 71 areas had price gains from a year earlier, including 14 metros with double-digit annual increases, and 73 areas had price declines; five were unchanged.

David Lereah, NAR’s chief economist, said it appears the fourth quarter was the bottom for the current housing cycle. “This information confirms 2006 was the year of contraction, and hopefully the fourth quarter was the bottom of this current business cycle,” he said. “Home sales are leveling at historically high levels, and examination of data within the quarter shows home prices stabilizing toward the end. When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices.”

They should at least be consistent shouldn't they?

There's a big difference between likely (i.e., a high probability) and hopefully (i.e., a desire or expectation).

In this Wall Street Journal story($), a completely different approach to reporting this news was undertaken, along with a handy box including links to related reports on problems with high-risk loans, fraud, and glut (two places).

The slump in housing deepened in the final three months of last year with median home prices declining in nearly half of the metropolitan areas surveyed and sales falling in 40 states, a real estate trade group reported Thursday.

The median price of a new home, the midpoint where half the homes sold for more and half for less, was $219,300 in the fourth quarter of last year, a drop of 2.7% from the same period a year ago.

Median home prices fell in 49% of the 149 metropolitan areas surveyed in the fourth quarter, compared to the same period a year ago. That was the largest percentage of metro areas reporting price declines since the Realtors began tracking price data in 1979.

The NAR is an industry trade group, but surely there are limits to how far they will go to help mold public opinion.

Then again, maybe not.

With the national median existing single-family home price down 2.7 percent from a year earlier, NAR President Pat Vredevoogd Combs noted this was not a broad enough view of home prices, going so far as to say:

Since the typical owner stays in a home for six years, it’s more useful to look at the five-year comparison for metro area home prices – most of them are seeing strong gains. The median five-year price gain is 41.8 percent.

Forty one percent - SOLD!