AP

Don't be fooled by the little uptick in home prices in today's Existing Home Sales report from the National Association of Realtors.

That was the message from the Realtors themselves!

Even the always glass-is-half-full chief economist Lawrence Yun made clear several times in the briefing before the report's release, that he expects home prices to come under significant pressure over the coming months, as inventories rise.

The report today showed inventories up 2.5 percent to 3.99 million units. At the current sales pace, that represents an 8.9 month supply. The current sales pace ticked down 5 percent in June, even though those numbers are still under the sway of the home buyer tax credit (remember, EHS represent closings in June, so contracts likely signed in April before the credit expired).

But more importantly, the Pending Home Sales Index, which represents contracts signed, fell off a cliff in May, down 30 percent, indicating that closings will be way off as well.

As the sales pace slows, the inventories will rise.

"Inventories will surpass ten months," says Yun. "If sustained, prices will surely be under pressure." Yun added that he originally expected the drag after the tax credit expiration to last about two months; he's now pushing that forecast to three to four months.

Bottom line, experts who follow housing are having a hell of a time predicting just where home prices are headed nationally. A new monthly report, Macro Markets Home Price Expectations, a venture by price guru Robert Shiller, surveys 109 experts ("real estate experts, economists and investment market strategists") for their price expectations.

The results for 2010 vary widely, anywhere from plus 4.9 percent to minus 12 percent. "In July 60 percent of the panelists projected negative home price growth for 2010," writes Shiller in the report.

The longer-term results, however, were less optimistic.

“Although still positive, the average outlook for five-year cumulative home price appreciation fell in July for the second consecutive month, and is now in single-digit territory," writes Terry Loebs, MacroMarkets Managing Director. "This new consensus suggests a less robust housing recovery scenario - one that, all other things equal, would result in U.S. household wealth by year-end 2014 being about $500 billion less than the level implied by the average of panelist responses just two months ago.”

We keep talking about all these housing indicators "stabilizing", sorry, the administration folks keep using that word. Perhaps they're not dropping the way they were, but they're "stabilizing" at historically negative levels.

Questions?  Comments?