The Golden Truth: Was Today's New Home Sales Number For Real?

Wednesday, August 26, 2009

Was Today's New Home Sales Number For Real?

To be blunt: No. As has been discussed and analyzed ad nauseum, the Government likes to release, and the mainstream media and Wall Street thiefs like to report, economic number numbers which have been "seasonally adjusted" and often bear no resemblence to reality and typically are subjected to future downward revisions which no one pays attention to.

With that in mind, let's review today's new home sales release, which was greeted with great fanfare on Wall Street and CNBC, as it was announced that July's new home sales (seasonally adjusted) increased 9.6% from June.

Let's look at the raw, unadjusted data, which can be found buried here: Census Bureau New Home Sales. July '08 to July '09 new home sales declined 9.3%. June to July this year did increase 8.3%, but was less than the "seasonally adjusted" nonsense, but keep in mind that your $8k taxpayer subsidy has fueled a small boom in lower priced homes, which is reflected in the decline in the home price metric. The median home price declined 13% $210,000. And finally, as Calculatedriskblog.com points out, July's non-seasonally adjusted new home sales number was the 3rd lowest for the month of July since the Census Bureau started tracking sales in 1963.

Oh, and one more point, as per homebuilder earnings reports for the 2nd quarter, cancellation rates are still running generally in excess of 20% (usually financing falls through). The Census Bureau does not take that into account and they do not back out actual cancellations when they revise past calculations.

Do not be sucked into the fanatasy that the Government and Wall Street is spinning right now. There is a monster wave of prime mortgage-financed homes which will hit the market before the end of the year and if Obama doesn't extend the Taxpayer Cash for Homes program, expect a cliff-dive in home sales at the lower end, as homebuyers are now allowed to credit the $8k tax credit as part of the their down payment - back to almost no-money-down mortgages again. Just like with the Taxpayer Cash to GM/Ford program, which saw interest and usage run out well before it was slated to expire, in all likelihood by the time Dec 1 arrives, most people who could get financing for a home using the tax credit will have already done so and even an extension of the program will not maintain current sales rates.

2 comments:

ericswanWednesday, 26 August, 2009
duly noted.
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cashtradrWednesday, 26 August, 2009
The uselessness of government data (as a barometer of real economic activity) has been known for a very long time. Frankly, forget the CPI, PPI, pending home sales, durable goods, etc. I'd like to see indices developed on the loss of American freedoms; growth in unelected officials' positions (czars) in Washington; and something to indicate the growth in anti-capitalists on Capitol Hill since, for instance, 2000 to the present. I would bet the latter would show a spike to rival Mt. McKinley since January of this year.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.