Before we go further, let’s first make it clear that the National Association of Realtors (NAR) has been completely ridiculous in the past with their spin of the U.S. housing market. There are no arguments there. Anything they put out should be viewed with healthy scepticism.
Yet we suspect some are blowing the NAR’s use of Seasonally Adjusted Data way out of proportion.
Big Picture: 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:
No, home sales did not rebound — that was purely the result of SEASONAL ADJUSTMENTS
Here’s the thing. You really should consider seasonal adjustments when judging month to month changes in housing. Because housing is very seasonal.
Sales always fell from August to September in the last few years. Thus to observe that sales fell in September vs. August on a Non-Seasonally-Adjusted (NSA) basis doesn’t say much. It’s like announcing that retail sales fell after Christmas.
Mark Hanson (and The Big Picture) disregards seasonal adjustments this year because we had a tax credit that boosted sales, pulling them forward into the month. Yet he removes the seasonal adjustment from September due to the tax credit this year, then also criticises the remaining NSA number for being boosted by tax credits as well. This is essentially double-penalising the data for the tax credit.
Thus if this year there was an odd tax-credit variable, you should keep the seasonal adjustments of monthly data, which is done every year because sales are seasonal, and then try to subtract out what the tax credit might have done to boost the result.
In fact, the NAR release made it very clear that tax credits were a huge factor in driving the latest data, right near the opening, but we agree that they were overly bullish in their wording.
NAR: “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,”
Which brings us to the final point. Wouldn’t it have been in the best interest of the NAR to talk down the latest data?
They’re begging for government support via an extension of the home buyer credit after all. It would be far more effective to show how badly government support is needed in order to keep housing out of the abyss, rather than to say housing has improved substantially.
Chart below from Calculated Risk.