One Hell of a Seasonal Adjustment: NAR's Existing Home Sales Math

Mish

The NAR says existing home sales are down 2.2% from a year ago. The breakouts by price range do not seem to add up.

The NAR reports Existing-Home Sales Falter 1.7% in June

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 1.7% from May to a seasonally adjusted annual rate of 5.27 million in June. Sales as a whole are down 2.2% from a year ago (5.39 million in June 2018).

Percent Sales by Price Range

Image placeholder title

Percent Changes From Year Ago by Price Range

Image placeholder title

The NAR's Supplemental Data provides a look at regional differences.

Supplemental Data

Image placeholder title

Weighted Contributions

Image placeholder title

Down 10% on a 35.7% distribution overwhelms up 1.0% on a 39.4% contribution.

I calculate net weighted sales as -4.72% year-over-year based on the the NAR's Sales Distribution Percentages.

Seasonal Adjustments

I bounced this off Calculated Risk who tells me there was a huge seasonal adjustment this year. To my way of thinking, seasonal adjustments should not affect year-over-year comparisons.

But it did, as presented.

It's one hell of a seasonal adjustment.

Explaining the Sales Decline

Please also see Existing Homes Prices Up 88th Month: NAR Can't Figure Out Why Sales Are Down

Mike "Mish" Shedlock

Comments (6)
No. 1-5
Bronco
Bronco

"To my way of thinking, seasonal adjustments should not affect year-over-year comparisons."

...

Calendar effect. June 2018 had 5 Fridays. June 2019 only had 4. Existing home sales counted when closed. Many closings occur on a Friday for several reasons. 1) everyone involved due a check at closing likes a Friday close ---> head to bank ---> knock off early for weekend and celebrate 2) Buyer wants a Friday close in order to move in immediately. The mortgage is pro rated ... clock starts ticking at closing. Closing on say a Tuesday and then not able to move till Saturday could easily cost buyer $hundreds.

wootendw
wootendw

Guess I bought into a declining market. No matter. I need a place to live and I'm locked in under 4% on a brick house in Norman, OK.

Greggg
Greggg

After looking into the police and fire pensions in my suburban locale, a for sale sign might the best home improvement I can make. Thinly populated areas do not have that problem. Might be a good time to make that move before real erosion takes place.

Sechel
Sechel

@Mish , Can you provide more color on the 'seasonal' adjustment. On the surface a seasonal adjustment should not impact yoy comparisons. It clearly sounds counter-intuitive. However while Yun never seems to act the economist, and always the housing booster offering sanguine analysis and forecasts the actual NAR numbers are not typically disputed.

Bam_Man
Bam_Man

Am I the only one who feels that we are being lied to 24/7/365 by everyone involved in the FIRE sector?


Global Economics

FEATURED
COMMUNITY