Gosh, this gets tiresome.
Once again, with one noteworthy exception, the business press's virtually blind acceptance of seasonally adjusted economic data, and its accompanying refusal to look at the underlying raw data, led it to paint a deceptive picture of an important element of the economy. This time, it was existing home sales for October. The seasonally adjusted annual rate for October reported by the National Association of Realtors this morning is almost 4 percent higher than seen in October 2014. The trouble is, the raw sales data show an increase of less than 1 percent.
Specifically, NAR reported the following:
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September. Despite last month's decline, sales are still 3.9 percent above a year ago (5.16 million).
While it may be in the NAR's best interest to fail to call attention to dismal underlying results, it's supposed to the job of the press to look at them anyway. Here's what happens when one does that:
No one can make a credible case that the NAR's reported 3.9 percent October 2015 increase over October 2014 is a better barometer of where the resale home market currently stands compared to a year ago than the actual puny 0.9 percent year-over-year increase — even if the underlying seasonal adjustment calculations were done correctly.
This stark difference rendered the reporting on the NAR release today found at the Associated Press, the Wall Street Journal, and Reuters largely useless. None of them reported that actual sales in October 2015 came in less than 1 percent above October 2014.
Only Michelle Jamrisko at Bloomberg News reported on the raw data: "Compared with a year earlier, purchases increased 0.9 percent in October before adjusting for seasonal variations." (See, that wasn't so hard, was it?) Despite that important observation, Bloomberg's headline writer (who could well have been Jamrisko) conveyed false optimism by trumpeting a distraction: "Sales of Existing U.S. Homes Fall From Second-Highest Since 2007." Folks, if you were going to tell us how things now compare to eight years ago, you really should have gone back another couple of years, when unit sales were over one-third higher than they are now, even though we're 6-1/2 years into an alleged economic "recovery." The problem is that we're in the midst of an expectations-shattering "new normal."
At least at the AP, one of the people reporter Josh Boak consulted got the interpretation right: "... the market is treading water." Otherwise, Boak abused the SAAR increase to make the following incorrect statement:
The decline comes after strong growth in home-buying for much of 2015, bolstered by steady job gains and low mortgage rates. Home purchases have advanced 3.9 percent from a year ago, even as buyers have fewer choices because the number of listings on the market has dropped 4.5 percent.
No, Josh. If you were comparing Octobers, which by the way was not at all clear, home purchases have not advanced 3.9 percent from a year ago; they've advanced less than one-fourth of that.
Boak could have looked at the actual data and compared the past 12 months (Nov. 2014 through Oct. 2015) to the preceding 12 months, but he didn't. If he had, he would have found a 6.4 percent increase. That's good news — for previous months this year like June and July, which showed double-digit percentages increase over the same month of the previous year. But it makes what's happening now — October's year-over-year change of less than 1 percent — that much more troubling.
At Reuters, Lucia Mutikani told us that "housing remains on firmer footing and sales are on track to be the best in eight years." While that may be the case for the full calendar year, early indications are that fourth-quarter existing home sales are going to go out like a lamb, not a lion.
At the Wall Street Journal, reporter Anna Louie Sussman didn't cite the miserable raw data increase, but made a couple of unique observations. Citing one of the most disappointing elements of the "new normal," she wrote that "Demographic trends, like young people marrying later or living at home, have slowed the pace of household formation." In a related point (though she didn't say that it's related), she noted that "sales at the lower end of the market, homes costing $100,000 or less, dropped by 9.1% from a year ago," while "Sales at the mid-to-upper end of the range were all higher from a year ago." That would indicate that this alleged "recovery," and the economic policymakers in the Obama administration and Democratic Party politicians responsible for it, are creating more economic inequality, even as they complain loudly about it.
Perhaps they should consider trying something different to enable the economy to grow more quickly ... Nah, it's better for them to politicize the problem they're making worse. The press will never call them on the carpet for their failures.
Cross-posted at BizzyBlog.com.
