Friday, October 23, 2009

Existing Home Sales... Not as Strong as You May Think

Bloomberg reports:

Sales of existing U.S. homes surged a record 9.4 percent in September as Americans rushed to take advantage of a tax credit for first-time buyers before it expires next month.

Purchases rose to a 5.57 million annual rate, more than forecast and the highest in more than two years, the National Association of Realtors said today in Washington. The median price fell at the slowest pace in a year as the number of houses on the market shrank.

As Barry of The Big Picture points out, there wasn't actually a jump on a non-seasonal basis:
Existing Home Sales fell 5.4% last month, despite the nonsense you have read elsewhere. NAR continues to bullshit America with their garbage data and spin, month after month, with few people calling them on it. Well, I’ve had it up to here with their garbage.
While I am not as fired up about the NAR reporting as Barry, it is important to note that the rush of last minute tax-credit incentivized home buyers did distort the impact on a non-seasonally adjusted basis (I am typically less inclined to have an issue with seasonally adjusted data when there aren't one-time items making the adjustment more or less useless).

That said, there is another key piece of data in the release; the prices. Everything that has been done thus far (the Fed's mortgage purchase program, the tax credit, etc...) has been with the idea that we can put an artificial floor in place in the housing market. The media hyped the success when the median prices jumped as recently as July... not so much in September.

Source: NAR

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