Sunday, October 25, 2009

Existing Home Sales FALL in September 2009

Existing Home Sales fell 5.4% last month, despite the nonsense you have read elsewhere.

NAR continues to bullshit America with their garbage data and spin, month after month, with few people calling them on it. Well, I’ve had it up to here with their garbage:

Big Rebound in Existing-Home Sales Shows First-Time Buyer Momentum

No, home sales did not rebound — that was purely the result of SEASONAL ADJUSTMENTS

You can see on the NON SEASONALLY adjusted chart, from August to September (Red Bar) Sales actually dropped. In prior years — 2005, 2006, 2007, and 2008 — there was always a big fall from August to September.

Why was this year so different? We have ZIRP (which will eventually go up) and a large 1st time buyers tax credit that is scheduled to expire. Hence, the unusual September activity that does not reflect the traditional drop off.

The tax credit effectively extended the purchase season which is why sales were even this strong. But when you consider the hundreds of billions spent to prop up the housing market, which only resulted in 34k additional sales over last September (one of the worst years on record for housing) and fewer sales YoY in CA, sales were really not that great. When organic sales go away suddenly for the season, which will happen in the near-term whether the tax credit is extended or not, it sets sales and prices up for the largest swings lower we have seen since all this began two years ago.

It is not clear whether the folks at the NAR are dumb as lawn furniture and make these misrepresentations honestly — or whether are just another group of disgusting spin doctors, willfully peddling lies because it helps their own agenda and their thousands of REALTOR members.

Those are pretty much the only options: Idiots or full of shit. (You decide).

In terms of outperformance following a stellar earnings release, Amazon certainly gets five stars. The company reported earnings yesterday after the close and impressed investors and analysts to such an extent that its stock rallied almost 27% today, boosting it to an all-time high. And this on a relatively forceful down-day for the broad market! The company's huge success can be attributed to the fact that more and more consumers are willing to shop on-line. While some people attribute this to overall improving economic fundamentals (i.e., people willing to spend more on discretionary items), some critical voices argue that it is actually a sign of a weak economy, as people are looking to save on sales taxes by shopping online.

While Amazon soared, the broad market sagged today, impeded by a combination of profit-taking after a prolong the rally, unsettling profit forecasts from major railroad companies, and a modest rebound in the US dollar (which put downward pressure on commodities and crude oil). The CEO of one of the leading railroad companies in the world - Union Pacific - suggested the economy might continue to 'limp along' until the unemployment situation improves. Another key railroad company - Burlington Northern - also issued cautious and rather lukewarm profit forecasts. Both railroad companies reported significantly lower profits, revenues, and earnings. Given their status as early indicators of (improving or deteriorating) economic activity, such disappointing forecasts from major railroads generated investor concern.

In economic news releases, the National Association of Realtors announced a 9.4% increase in the sales of existing homes in September, close to double the amount economists had been expecting. However, the number was boosted by a swelling number of home buyers wanting to take advantage of a government tax credit that is set to expire at the end of next month.

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