There seems to be lots of confusion about today’s Commerce Department release on new home sales. The report showed that new home sales were at a seasonally adjusted annual rate of 467,000. Part of the confusions stems from the fact that that is a completely bogus, made up, fictitious number in the first place. Seasonal adjustments are arbitrary attempts to create a smooth curve and they aren’t finalized until years after the fact. In addition, annualizing a single month is insane to begin with. Analysts are trying to make sense out of fiction. In the meantime, the headline number missed the Wall Street conomist guesspectation of 475,000.
The new home sales data has the benefit of being contract data reported just a few weeks after the survey date. It’s the closest thing we have to an official real time measure of the state of the housing market. All of the widely followed existing home sales data suffer from severe lag and the error is compounded by extreme smoothing in worthless measures like Case Shiller. By the time of the Case Shiller release, it represents an idealized market from deals that went under contract 5 months ago, not the market as it is today. The Commerce Department, to its credit, at least measures current contracts, and it does make available the actual, as reported, unsmoothed, unmanipulated data. The mainstream media, to its discredit, completely ignores the actual monthly data and only reports the made up, seasonally adjusted crap.
