More On Yesterday’s New Home Sales Fraud

As I detailed yesterday – LINK – yesterday’s new home sales report was complete fiction. Notwithstanding all of the other statistical manipulations that go into the Government’s Seasonally Adjusted Annualized Rate of sales metric, including flawed data sampling, Mark Hanson – who does cutting edge housing market analysis – reduced yesterday’s new home sales report to its essence:

A rounded 4,000 more homes sold on a Not Seasonally Adjusted basis than in June, ALL from the Southern region.  This added up to a massive 72,000 month to month and 114,000 year over year Seasonally Adjusted Annualized Rate surge and headlines of “9-year highs,” all due to bogus seasonal adjustments that should not have applied due to the number of weekends in the month…”  – Mark Hanson, M Hanson Advisors

The 4,000 more homes sold in the South month to month more than likely results from flawed data collection, for which the Census Bureau is notorious.  But even assuming that the number is good, the Government’s “seasonal adjustment” sausage grinder translated that into 72,000 more homes sold in July vs June and 114,000 year over year on a Seasonally Manipulated Annualized Rate basis.

Not to pile on to what now should be the obvious fact that the Government’s new home sales report is not more credible than its employment report – both for which the Census Bureau collects the data – Credit Suisse published research earlier in this month for July in which its market surveys showed that:

  •  its “buyer” index declined in July to 40 from 41 in June;
  • expected traffic declined in 29 of 40 markets in July vs 25 in June – including Portland, Seattle and New York experiencing “sharp declines;”
  • “Florida markets remained depressed;”
  • California overall was lower in July

Finally, the Mortgage Bankers Association reported that purchase mortgage demand hit a 6-month low in July.  New Home “sales” are based on contracts signed.   If mortgage applications and contract signings are highly correlated, as 93% of all new home buyers use a mortgage.  If mortgage applications are declining, it means that contract signings are declining.

How on earth is it at all possible that the Government was able to measure a 9-year high in new home sales for July when every other actual market transaction indicator declined, some precipitously?

The housing market is headed south right now.  Inventory is piling up all over metro-Denver, especially in the high-end areas.  Emails to me from readers who are industry professionals all over the country are reporting similar occurrences in their areas.

The Government can populate the news headlines with fraudulent propaganda – something which has become de rigeur – but propaganda and fraudulent economic reports do not generate real economic activity.  At some point the elitists running the system will be at a loss to explain the difference between their lies and reality.  That’s when we’re all in big trouble…

5 thoughts on “More On Yesterday’s New Home Sales Fraud

  1. It looks like the elites have decided to lie and make up their own facts for a long, long time. I think their idea is to keep lying until there is some real improvement. They have endless money supply and time on their side, and short seller don’t. After the crash of 2008, I think the elites have become mighty determined to keep the market propped up by doing whatever it takes – money printing, false propaganda, outright buying of stocks, etc. It used to be that the stock market was a barometer of the real economy and looked about 6 months ahead. Now it can be safely said that the stock market has no correlation whatsoever with the real economy. American consumers don’t have money to spend on clothes at retailers yet they are buying increasingly expensive homes in higher numbers? Yeah right! And how much longer will money launderers from abroad be allowed to take over the housing supply of the US?

    1. What an awesome statement! “keep lying until there is some real improvement”
      that about sums it up in one PERFECT statement!

  2. ” At some point the elitists running the system will be at a loss to explain the difference between their lies and reality. That’s when we’re all in big trouble…” Actually not as we are likely to be involved in a major war before that happens at which point the thin edge of the wedge has been fully sunk in, any contrary reporting will be shut down and we discover what the big talking libertarians will do when they’re actually faced with whatever the feds bring. Some will resist, most will roll over.

    Expect the worst and you will rarely be disappointed.

  3. I live in “the south” in a very very nice area by the beach. A “developer” built over 20 new homes and purchased several more lots to build on. His last home sold 6 months ago and the rest stay EMPTY! Lock box, not sold, and some for sale signs have been taken off to decrease competition from the other people trying to sell their home.
    The average asking price is $500,000.00
    The lots are cleared but undeveloped. He put a sign up on one lot to show the home that “could” be built there IF anyone purchased it.
    In short… IT’S OVER! WE’RE BACK TO 2007 LOOKING DOWN AT A DEEPER AND STEEPER DECLINE!

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