In his latest commentary on the National Association of Realtors’ Existing Home Sales reports, John Williams of Shadowstats.com had this comment: “the quality of data underlying this series remains questionable, as seen in erratic reporting over the years” (Shadowstats.com). This speaks to my recurring assertion that the National of Association of Realtors’ existing home sales reports have become just as questionable as the Government-generated new home sales reports.
More fascinating to watch is the NAR’s chief clown, Larry Yun, vacillate between his justifications for worse than expected reports and his glowing promotion of better than expected reports. The volatility of both the NAR’s report and Yun’s commentary on these reports is become more unstable and erratic in the past 12-18 months. I have previously written several commentaries on this issue with detailed source-references supporting my assertions.
In this context, the latest “Pending Homes Sales” report is hardly worth commenting on. Perhaps the Zerohedge title of their announcement of the report sums it up succinctly: “February Pending Home Sales Surge By Most on Record Amid Midwest Miracle” LINK.
The “Midwest Miracle” involves an 11.4% seasonally adjusted annualized rate jump in pending home sales in the midwest region for February vs. January. What’s even more preposterous is “not seasonally adjusted” 61.4% moonshot in pending home sales in the midwest vs. January. Aside from data collections issues, the biggest source of potential error in occurs in the “seasonal adjustments” and the conversion of month to month and year over year seasonally adjusted data into an annualized rate. The NAR uses the same seasonal adjustment algorithm as the Government. Of course, every other privately compiles economic activity report is showing an economy sinking quickly into quagmire equivalent to that of 2008/2009, in direct contrast to the rosy Government and NAR data. Funny thing, that.
Perhaps most amusing is that when the NAR’s report miss expectations, Larry Yun attributes it to the weather. I guess the weather in the midwest was sunny and warm everyday in February…Of course, there’s nothing like “boots on the ground” reports from readers, like this one from southern Ohio (the midwest, by the way):
Another data point for you on the RE front Dave: I sold my home (in SW Ohio) this time last year. I listed it on Zillow with no realtor involvement. I reduced the price of the house by the imputed cost savings of not having a realtor -every one of which I ever met was a useless bullshitter. I had a contract in less than two weeks. The millennial couple who bought it (btw, a lot of house for a young couple) put NOTHING down. At closing I noticed their mortgage was about 103% LTV. The VA charges all kinds of fees and the buyers just rolled most of them up into the mortgage. On top of his 103% LTV note he still had to come up w/ 7 or 8 grand for other silly financing fees and pre-paids.
Anyway, I priced my house to sell and it sold -quickly. Some of my neighbors were greedy and listed theirs with useless realtors asking ‘mkt prices’ and they are STILL sitting unsold. On top of that, 3 builders built spec homes last summer and all 3 of those are also sitting unsold. What is going to happen when/if interest rates ever normalize?