The Housing Bubble Is Popping

The Seasonally Adjusted Annualized Rate (SAAR) economic numbers are now manipulated beyond the definitional meaning of the word ‘absurd.’ This is especially true with the housing market and auto sales reports. – Investment Research Dynamics
Today the NAR released its ‘pending home sales’ index. On a ‘seasonally adjusted annualized rate’ basis, it showed 1.3% gain over June. June’s original report was revised lower from .8% to -.2%. Mathematically, this downward revision enabled the National Association of Realtors to report a gain from June to July. Keep in mind this is on a ‘seasonally adjusted’ and ‘annualized rate’ basis.
Now for the real story – at least as real as the reliability of the NAR’s data sampling techniques. In the same report the NAR shows the ‘not seasonal adjusted’ numbers. (click on image to enlarge) On a year over year basis for July, pending home sales weredown 2.2%. They were down 13% from June. This is significant for two reasons. Using a year to year comparison for July removes seasonality and it removes the ‘seasonal adjustments.’ Just as important, if you look at historical data for existing home sales by month, ‘seasonality’ between June and July is non-existent – i.e. in some years June sales exceed July and in other years July exceeds June.
The not seasonally adjusted data series is much more reflective of the real trend in the housing market that has developed this summer than is the manipulated SAAR number vomited by the NAR’s data manipulators. The 13% from June to July should shock the hell out of housing market perma-bulls.

This post was published at Investment Research Dynamics on August 31, 2016.