Today saw yet another "unexpected" disappointing development in the U.S. economy. The Census Bureau reported that seasonally adjusted sales of new homes, an area thought to be a bright spot, declined sharply in September to an annual rate 468,000 from 529,000 in August. The bureau also revised July and August significantly downward.
As bad as the as the adjusted numbers were, the raw data was even worse. Despite all of this, and despite the fact that the pace of new-home sales is still only about two-thirds of what it used to tell readers would be a "normal" or "healthy" level, the Associated Press's Josh Boak, apparently taking a double shot from today's good-news koolaid delivery, tried to pawn off today's result as an interruption in what has otherwise been a year where "zeal for newly built homes took off."
Boak omitted at least three key facts:
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Though September's seasonally adjusted annual sales "somehow" increased by about 2 percent from September 2014 (from 459K to 468K), actual (i.e., not seasonally adjusted) sales were about 3 percent lower (from 37K to 36K), turning in the worst monthly performance this year — even worse than the cold-weather months of January and February:
- July and August were revised down by a combined 42,000 (19K and 23K, respectively). Though the September drop from August's revised level was 11.5 percent, its decline from August's original estimate was over 15 percent (84K decline divided by 552K).
- September's 468,000 in annualized sales is only about two-thirds of what the AP used to tell readers was a "healthy" or level of 700,000. The wire service used to routinely tell readers (examples here and here) what it considered healthy (I think 750K or 800K is a better benchmark), but it has stopped doing so. Why? That's simple: AP has figured out that as long as current national economic policies continue, the housing market will likely never return to health. So instead it wants to convince us that current levels are part of a supposedly acceptable "new normal."
But Boak's worst offense was his irrational and arguably delusional take on the housing market's performance so far this year seen in the third paragraph below:
US NEW HOME SALES FALL SHARPLY IN SEPTEMBER
Sales of new homes plunged sharply in September to the slowest pace in 10 months, as higher prices and slower overall economic growth weigh on the housing market.
The Commerce Department said Monday that new-home sales slumped 11.5 percent last month to a seasonally adjusted annual rate of 468,000, the lowest level since November of 2014. September's drop ended a two-month streak of accelerating sales.
Americans' zeal for newly built homes took off this year - yet now appears close to having topped out. Solid hiring over the past three years has improved many family balance sheets, while rising home prices has returned equity to current homeowners now seeking to upgrade to new residential developments. Sales of new homes have soared 17.6 percent during the first nine months of 2015.
That "soaring" 17.6 percent increase amounts to a whopping 59,000 homes — fewer than 7,000 per month — and means that new-home sales volume is about 70 percent of the way towards genuine health instead of about 62 percent. Big whoop. The AP itself, recognizing bad news which might embarrass the Obama administration in Washington if it were more widely known, made sure that Boak's story, as hokey as it is, disappeared from its "Top Ten" list of business news items and as an item teased on its "Big Story" page in under ten hours.
If September's dive wasn't a one-off, and it probably wasn't, what we saw earlier this year was probably as "good" as it's going to get for quite some time.
Cross-posted at BizzyBlog.com.
