David Lereah, chief NAR meteorologist

With all the turmoil in the housing market affecting home sales -- home price appreciation (or the lack thereof), mortgage rates (and the sudden return of underwriting standards), consumer sentiment ("Is it REALLY a great time to buy?") -- NAR economist David Lereah remains fixated on the weather.

Two reports NAR has put out this month sound like National Weather Service bulletins. We've been told about the "unusually mild weather in December," a "sudden chill" in January, and that February was the coldest on record since 1979.

“Our goal each month is to fine-tune the forecast based on the latest housing data and a variety of economic indicators, but extraordinary weather variations are skewing home sales and clouding the picture,” Lereah said in a March 13 report. Lereah predicted a housing recovery was likely this year, but said "unusual weather patterns and problems in the subprime lending marketplace" made it hard to say exactly when.

There's ample evidence that a rise in foreclosures and the ensuing tightening of credit is going to have some very real impacts on the housing market (see Banc of America Securities report predicting the credit crunch will cut demand for housing by 15 percent). But the weather?

In the March 13 report, Lereah was ready with an answer to "critics who don’t understand the weather impact on seasonally-adjusted sales." In December, he said, the good weather brought out shoppers and bumped up January existing home sales. The sudden chill in January then put a damper on sales, he said.

If that's true, how to explain today's release of the sales numbers for February? Sales of existing homes were up 3.9 percent from January -- the biggest monthly rise in three years. Lereah said the numbers came as "a bit of a surprise."

Apparently, we should forget about January's chill, which is not mentioned in today's report. Some of the rise in home sales in February might be due to the mild weather back in December, Lereah theorizes. Oh, and by the way, "fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers.”

In his latest forecast, Lereah commits himself to a continued discussion about the weather and its impact on home sales. Sales may decline in March (because of the weather), he says, before rebounding in the spring. So we will probably be hearing about the weather again in April, when the numbers for March come out.

If home sales do decline in March, it will be reassuring to know that it was because people were unable to venture outside in February, and were undoubtedly sitting at home in front of their computers with no means of finding that new home they've been pining for. If home sales are up, we may already be done talking about the weather.
--Matt Carter, Inman News

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