Housing market predictions: Will economists ever learn?
It's a favorite game of economists and housing market watchers. When your prediction of a housing rebound falls flat, just push off that rosy estimate until the next year.
Just take a look at Fannie Mae's revised forecast for home sales across the country.
Faced with a sluggish economy and a housing market headed south, Fannie Mae has revised downward its prediction of a 6 percent jump in overall home sales this year.
It's now down to 4.3 percent, with Fannie also predicting a decline this year in new home construction, compared to an increase it had been predicting.
But don't worry, just wait until next year, Fannie Mae's economists tell us.
That's right, Fannie Mae is predicting a roaring market turnaround in 2012. In fact, Fannie, after seeing its predictions for a turnaround in 2011 fall flat, has actually juiced up its already optimistic projections for 2012.
I'll quote directly here from a piece by Mortgageloan.com
On housing, Fannie is predicting a similar rebound next year, with stronger gains in 2012 than were previously predicted. The lender is now calling for housing sales to grow by 10.2 percent next year, up from last month's prediction of an 8.5 percent increase. Construction starts on single-family homes are predicted to come back strongly in 2012, with a 46 percent increase over this year's anemic rates.
The basic rule appears to be this: The worse things look now, the grander the predicted turnaround for next year or some other point just far enough off to look plausible.
Now that's great if you are rooting for some perpetual loser of a sports team, like the Cubs, but you'd expect a bit more caution from economists, even if they are working for Fannie Mae.
