Seems like every week, the National Association of Realtors (NAR) finds a reason to pump residential homebuying by looking at numbers and spinning them to claim that down is up, white's the new black, a Jolly Rancher is a sprinkle. Worse yet, the business media -- even outfits like The Wall Street Journal, where they know how to add and subtract -- parrot the NAR party line. As a result, unless Joe Sixpack happens to drop by on a day when I'm watching the NAR, or frequents a more vigilant (and feisty) housing blog like Housingpanic, he's likely to think things are getting better. That would be wrong

Let's set the record straight, shall we? Pending home sales are not "up." They may be a fraction of a percentage point less bad than last month, but compared to last year, the NAR's index is down 18.4%. And that's only through October, before all the rest of the recent, dismal economic news came home to roost.

Compared to last month, the NAR's used-home sales prediction numbers haven't wavered, but they think the new home market is going to get a lot worse. As usual, the over-optimistic tenor (or is that ineptitude?) of NAR forecasting is best illustrated by its own, constantly downwardly revised predictions. Here's how the latest new housing digits stack up.

Est. 2007

Variation From Prior Month

Variation From Prior Year

Variation From Jan. Forecast

Spin

January

957,000

 

 (8.86%)

 

"Gradual Rise Projected for Home Sales"

February

961,000

 0.42%

 (8.48%)

 0.42%

"Existing-Home Sales To Improve, With Later Recovery For New Homes"

March

950,000

 (1.14%)

 (9.52%)

 (0.73%)

"Housing Recovery Likely This Year, But Timing Isn't Clear"

April

904,000

 (4.84%)

 (13.90%)

 (5.54%)

"Tighter Lending Standards Good For Housing, But Will Dampen Sales"

May

864,000

 (4.42%)

 (17.71%)

 (9.72%)

"Housing Forecast Changed Slightly Due to Impact From Tighter Lending"

June

860,000

 (0.46%)

 (18.10%)

 (10.14%)

"Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn"

July

865,000

 0.58%

 (17.62%)

 (9.61%)

"Home Prices Expected to Recover in 2008 As Inventories Decline"

August

852,000

 (1.50%)

 (18.86%)

 (10.97%)

"Near-Term Home Sales to Hold in Modest Range"

September

801,000

 (5.99%)

 (23.71%)

 (16.30%)

"Mortgage Problems to Dampen Home Sales in The Short Term"

October

804,000

 0.37%

 (23.43%)

 (15.99%)

"Improvement in Mortgage Market Bodes Well for Housing in 2008"

November

796,000

 (1.00%)

 (24.19%)

 (16.82%)

"Modest Recovery for Existing-Home Sales in 2008 as Credit Crunch Subsides"

December  

788,000

 (1.01%)

 (24.95%)

 (17.66%)

"Existing-Home Sales to Trend Up in 2008"

Moral of the story? Don't be duped by lazy reporting and interest-group fact-flipping. Housing has a long way to fall, and it will be taking homebuilders like Toll Brothers (NYSE:TOL), Hovnanian Enterprises (NYSE:HOV), and Pulte Homes (NYSE:PHM) down with it, along with life-supported lenders such as Countrywide Financial (NYSE:CFC) and desperate banks like Citigroup (NYSE:C), Washington Mutual (NYSE:WM), and UBS (NYSE:UBS). It's going to sink plenty of real estate agents, too -- which is why the NAR is working so hard to try and rebuild its media machine.

Given that any mortgage bailout is likely to be completely ineffective at best, the hissing housing bubble has a good chance of spearing the entire economy. Invest accordingly.

At the time of publication, Seth Jayson, a top-ten CAPS player, had no positions in any company mentioned here. See his latest CAPS blog commentary here. View his stock holdings and Fool profile here. Washington Mutual is an Income Investor recommendation. Fool rules are here.