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Opinion, commentary and analysis on everything that makes the U.S. housing economy tick -- not to mention the ghosts in the machine, too. Written by HW's team of editors and reporters each business day.

Here's why the latest NAR report is actually bad news

March 21, 2013

An interesting reaction on Twitter Thursday morning followed a strange trajectory into press reports.

First, the National Association of Realtors stated housing inventory posted this huge monthly leap, nearly 10%.

This was quickly followed by Trulia chief economist and VP of Analytics Jed Kolko commenting on the news.

Several mortgage finance reporters jumped on the latter, praising his one quote about how the inventory crunch "may be finally easing for good."

Coverage from CNNMoney, Reuters, USA Today — you name it — focused on the three-year high for home sales. The housing recovery is here, they report, and it's accelerating.

But wait, let's not get ahead of ourselves. One only needs to take a look at the totality of Kolko's comments to put the NAR report into the appropriate perspective.

People looking for homes is great for Trulia. Trulia lists for sale homes as its core business model. As long as people are looking for home, they're looking on destinations such as Trulia.

However, the data comes from NAR, whose members get paid by selling homes.

This is something they could do a whole lot more of, if the inventory allowed.

So NAR is actually saying unnecessary tight inventory is a bad thing, which Kolko noted.

Even Kolko added caution, "it’s critical not to mistake seasonal jumps for the underlying trend."

So what is the trend? Well, the real news to Thursday's NAR report is inventory remains 19.2% down from last year.

In 12 months, more of these homes could not be made available? There seems to be a fundamental failure in housing happening here.

It's an outrage that home affordability should be so low, but there remains nothing to buy. The anecdotal evidence of bidding wars, which Kolko also alludes to, should not be happening in a burgeoning housing recovery.

Those who waited on the sidelines, kept their finances in order, and showed some well-needed prudence should be rewarded with a good housing deal. Instead, they are forced to wait at least until summer to get a decent bid in.

So forgive us if we don't think Thursday's NAR report isn't as rosy as others think.

As Kolko puts it, "buyers have little to choose from and agents have little to sell." Not good.

And so this is why the HousingWire headline reads: "NAR: Housing inventory growing at woefully slow pace."

 

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