Wouldn’t it be refreshing, amidst all the predicting and prognosticating about a housing bubble, to hear an expert say he wasn’t sure where the housing market was headed? That’s sort of what UBS Economist James O’Sullivan did in today’s New York Times story about October’s 13 percent jump in sales of new homes. “It’s not 100 percent clear where housing really is,” O’Sullivan said of the latest Commerce Department numbers.
The closest he came to a prediction was to say that the residential market probably isn’t as strong as the new-home numbers imply. The housing boom of the last decade has had a beautifully humbling effect on professional prognosticators. Economists had been predicting new-home sales to come in at a seasonally adjusted annual rate of about 1.2 million in October. Instead, they rose to an annual pace of 1.42 million, the biggest one-month increase in 12 years. But resales have sagged, inventories are up, and new-home sales fell 9.5 percent in the Midwest. Then again, employment, durable goods orders and consumer confidence seem to be on the upswing. What’s a pundit to do?
Punt, apparently. “When you think you know what the market is doing, as I do, I look at this and say, ‘Wow, at best I’m giving this a wait and see attitude,'” David Seiders, of the National Association of Home Builders, told CNN Money. “These numbers threw a wrench into the works,” Morgan Stanley advisor Kevin Flanagan told Bloomberg. Our favorite response, however, was from National Association of Realtors Chief Economist David Lereah, who turned a nicely paradoxical phrase in a Washington Post interview: “…the boom is winding down to an expansion.”